A portion of the current assets section of the December 31, 2013, balance sheet
ID: 2418993 • Letter: A
Question
A portion of the current assets section of the December 31, 2013, balance sheet for Gibbs Co. is presented here:
(2,600
The company's accounting records revealed the following information for the year ended December 31, 2014:
Calculate the net realizable value of accounts receivable at December 31, 2014, and prepare the appropriate balance sheet presentation for Gibbs Co., as of that point in time. (Hint: Use T-accounts to analyze the Accounts Receivable and Allowance for Bad Debts accounts.) (Amounts to be deducted should be indicated with minus sign.)
Account Rece
Less: Allowance for bad Debts
A portion of the current assets section of the December 31, 2013, balance sheet for Gibbs Co. is presented here:
Explanation / Answer
Solution.
Accounts recievable............23,500
Debit A/R 23,500
Less: Allowance for bad debts......(2,600) $20900
Credit Allowance for 2,600
The companys accounting records showing the following information for the year ended December 31,2011:
sales (on all accounts)......156,500
Debit A/R for 156,500
Cash collections from customers......148,500
Credit A/R for 148,500
Accounts written off.............3,500
Debit Allowance for 3,500
Credit A/R for 3,500
Bad Debts expense (accrued 12/31/11)........6,000
Credit Allowance for 6,000
After the amounts are put into the T accounts, you should see that you have a debit balance of 28,000 in Accounts Receivable and a credit balance of 5,100 in Allowance for Doubtful Accounts. That leaves a net realizable value of 22,900 (28,000 - 5,100)
Balance sheet presentation would just be:
Accounts Receivable. . . . . . . . . . . . . . .28,000
Less:
. .Allowance for Doubtful Accounts. . . . . 5,100
. . .Net Realizable Value. . . . . . . . . . . . .22,900