At January 1, 2014, Famous Thirty Three Company reported accounts receivable of

Question

At January 1, 2014, Famous Thirty Three Company reported accounts receivable of $100,000 and the allowance for doubtful accounts had a $15,000 credit balance. Famous Thirty Three Company records bad debt expense using the net credit sales method and estimates that 5% of its credit sales each year will prove to be uncollectible. Famous Thirty Three Company reported the following information for 2014 and 2015:

2015 2014

Sales revenue $428,000 ?

Cash collections from customers $410,000 $370,000

Accounts receivable at December 31 ? ?

Allowance for doubtful accounts at December 31 $59,600 $29,900

Write-offs ? $9,400

Recoveries ? $4,700

At December 31, 2015, Famous Thirty Three Company's net realizable value of accounts receivable totaled $67,200. Calculate the amount of recoveries recorded by Famous Thirty Three Company in 2015. Do not use decimals in your answer.

Explanation / Answer

Allowance for doubtful accounts=29900-9400-4700 15800 Accounts Receivable 100000 Sales in 2015 428000 Cash Collection=100000+428000-x X=528000-410000 Accounts Receivable at 31 Dec 2015 118000 Sales-Accounts Receivable in 2015 310000 So, $100000 is received for 2014 thant means no bad debt Recovery in 2015 for 2014 $15800 In allowance account it is 43800 Net Relizable value= Accounts Receivable-Allowance for bad Debts 67200=118000-Total allowance x=118000-67200 50800 So allowance for doubtful accounts on 31 Dec 2015 $59,600 Less: recoveries 15800 Less: write off(50800-43800) 7000 Balance

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