Analysis of accounts receivable and allowance for bad debts—determine ending balances A portion of the current assets section of the December 31, 2010, balance sheet for Gibbs Co. is presented here:
|
Accounts receivable |
$63,000 |
|
|
Less: Allowance for bad debts |
(9,000) |
$54,000 |
The company’s accounting records revealed the following information for the year ended December 31, 2011:
|
Sales (all on account) |
$480,000 |
|
Cash collections from customers |
435,000 |
|
Accounts written off |
10,500 |
|
Bad debts expense (accrued at 12/31/11) |
16,500 |
Required:
Calculate the net realizable value of accounts receivable at December 31, 2011, and prepare the appropriate balance sheet presentation for Gibbs Co., as of that point in time.