Acct 201-Exam #2 (B)-Fall 2017 Short Exercises (40 Points) Exercise #1 (6 points
ID: 2572421 • Letter: A
Question
Acct 201-Exam #2 (B)-Fall 2017 Short Exercises (40 Points) Exercise #1 (6 points) Agnew Company uses the percent of receivables method to estimate uncollectible accounts expense. Nixon began operations in 2016, recognizing sales on account of $85,000 and cash collected from accounts receivable of $71,000, respectively. In preparation for the company's 2016 estimate of uncollectible accounts expense, Agnew prepared the following aging schedule: Number of Days | Receivables Amount | % Likely to be Uncollectible Amount Past Due $7,500 $2,000 Current 0-30 31-60 61-90 | 1% 5% 51,500 $1,000 30% 50% -- Over 90 $2,00 TotalS14,000 Required: What is the net realizable value of Agnew's accounts receivable at December 31, 2016?Explanation / Answer
Numner of Days Past Due Receivable Amount (a) % Likely to be Uncollectible (b) Allowance Amount (a * b) Current 7500 1% 75 0-30 2000 5% 100 31-60 1500 10% 150 61-90 1000 30% 300 Over 90 2000 50% 1000 Total 14000 1625 Net Realizable Value = Receivable Amount - Allowance Amount 14000 - 1625 12375