A.) Refer to Atlantis Tropicals. If the aging approach is used to estimate bad d
ID: 2425918 • Letter: A
Question
A.) Refer to Atlantis Tropicals. If the aging approach is used to estimate bad debts, how much is the net realizable value of the accounts receivable at December 31, 2012?
B.) Refer to Atlantis Tropicals. Assume that the net realizable value is $210,000 after the adjustment for bad debts in 2012. How much is the net realizable value of accounts receivable after a customer's account of $15,000 is written off?
Atlantis TropicalsThe following information was taken from the company’s records at the end of 2012.
Credit Sales $1,000,000 Sales returns and allowances 80,000 Accounts Receivable--December 31, 2012 255,000 Allowance for Doubtful Accounts--December 31, 2012 (Before adjustment for bad debts) 23,000 Estimated uncollected accounts (per aging schedule at December 31, 2012) 35,000
A.) Refer to Atlantis Tropicals. If the aging approach is used to estimate bad debts, how much is the net realizable value of the accounts receivable at December 31, 2012?
B.) Refer to Atlantis Tropicals. Assume that the net realizable value is $210,000 after the adjustment for bad debts in 2012. How much is the net realizable value of accounts receivable after a customer's account of $15,000 is written off?
Explanation / Answer
Net realizable value of the accounts receivable at December 31, 2012 ,If the aging approach is used to estimate bad debts =
Accounts Receivable on December 31, 2012 - Estimated uncollected accounts as per aging schedule at Dec 31, 2012
= 255000 - 35000
= $220000
B). Net realizable value of accounts receivable after a customer's account of $15,000 is written off =
Net realizable value before customer's account written off - customer's account written off
= 210000 - 15000
= $ 195000
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