This class is hard I suck at this PLEASE HELP!!! During the first year of operat
ID: 2357661 • Letter: T
Question
This class is hard I suck at this PLEASE HELP!!!During the first year of operation, 212 Martin's Appliance recognized $292,000 of service revenue on account. At the end of 2012, the account receivable balance was $57,400. Even though this is his first year in business, the owner believes he will collect all but 4%of the ending balance.
NET REALIZABLE VALUE $55,104
A. What amount of cash was collected by Martin's during 2012?
B. Assuming the use of an allowance system to account for uncollectible accounts, what amount should Martin record as uncollectible accounts expense in 2012?
C. What is the realizable value of receivables at the end of 2012?
Explanation / Answer
The formula is Beginning receivable balance Plus Credit Sales Less: Cash collected Equals ending receivable balance a) So here we have 0 +292,000 -x = 57,400 x= 292,000-57,400= 234,600 cash collected. b) If 4% of the ending balance will not be collected this will be 57,400*.04= 2,296. So Martin should record 2,296 as uncollectible for 2012. c) Net realizable value of receivables is receivable balance minus estimate of amount uncollectible so here we have 57,400- 2,296= 55,104.