San Mateo Company had the following account balances at before recording bad deb

Question

San Mateo Company had the following account balances at before recording bad debt expense for the year. 12/31/16 accounts receivable allowance for uncollectible accounts credit sales for 2016 $1,050,000 debit balance 8,000 debit balance $2,100,000 San Mateo is considering the following approaches for estimated bad debt expense for 2016: based on 2% of credit sales based on 5% of year end accounts receivable 6.What amount will San Mateo charge to bad debt expense at the end of 2016 under each method? Income Statement approach? Balance Sheet Approach? . What is the net realizable value of San Mateo's account recievable under the Income Statement

Explanation / Answer

6 Income statement approach = 2100000*2% = $42000 Balance sheet approach = (1050000*5%)+8000= 60500 7 Net realizable value = 1050000-42000+8000= 1016000 8 Net realizable value = 1050000-(1050000*5%)= 997500

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