Required information [The following information applies to the questions display

Question

Required information [The following information applies to the questions displayed below.] Sage Inc. experienced the following transactions for 2018, its first year of operations: 1. Issued common stock for $50,000 cash 2. Purchased $140,000 of merchandise on account. 3. Sold merchandise that cost $110,000 for $250,000 on account. 4. Collected $236,000 cash from accounts receivable 5. Paid $118,000 on accounts payable 6. Paid $50,000 of salaries expense for the year 7. Paid other operating expenses of $28,000. 8. Sage adjusted the accounts using the following information from an accounts receivable aging schedule Number of Days Past Due Percent Likely to Be Allowance Uncollectible 0.01 0.05 0.10 0.20 0.50 Amount Balance Current 0-30 31-60 61-90 Over 90 days $10,000 2,000 1,200 500 300 c. What is the net realizable value of the accounts receivable at December 31, 2018? Net realizable value

Explanation / Answer

Days Amount % uncollectible Allowance Current 10000 1% 100 0-30 2000 5% 100 31-60 1200 10% 120 61-90 500 20% 100 Over 90 300 50% 150 Total 14000 570 Net realizable value = 14000-570 = $13430

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