A firm is legally owed $100 by its customers for services already performed. The

Question

A firm is legally owed $100 by its customers for services already performed. The firm’s management now estimates that of the $100 in trade receivables, $9 will not be collected. The firm’s accounts receivable will be reported as follows on the firm’s balance sheet:

Select one:

a. Within current assets: “$91 trade receivables, net of allowance of $9”

b. All of the listed answers

c. Within current assets: “$100 trade receivables”; and within current liabilities: “$9 allowance for bad debt”

d. Within current assets: “$91 customer receivables, net of allowance of $9”; and within current liabilities: “$9 provision for bad debt”

e. Within current assets: “$109 customer receivables, net of estimate for uncollectibles of $9”

Explanation / Answer

Within current assets: “$91 trade receivables, net of allowance of $9” Option A is correct

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