A portion of the current assets section of the December 31, 2019, balance sheet for Gibbs Co. is presented here: Accounts receivable$23,700 Less: Allowance for bad debts (3,500)$20,200 The company’s accounting records revealed the following information for the year ended December 31, 2020: Sales (all on account)$154,500Cash collections from customers 147,000Accounts written off 2,900Bad debts expense (accrued at 12/31/20) 5,800 Required:Calculate the net realizable value of accounts receivable at December 31, 2020, 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.) At December 31, 2020Accounts receivableLess: Allowance for bad debtsAccounts receivable (Net)

Ending Balance of Accounts Receivable 23,700 Cash collections from customers…

Answered: Calculate the net realizable value of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

A portion of the current assets section of the December 31, 2019, balance sheet for Gibbs Co. is presented here:


Accounts receivable	$	23,700
Less: Allowance for bad debts		(3,500	)	$	20,200

The company’s accounting records revealed the following information for the year ended December 31, 2020:


Sales (all on account)	$	154,500
Cash collections from customers		147,000
Accounts written off		2,900
Bad debts expense (accrued at 12/31/20)		5,800

Required:
Calculate the net realizable value of accounts receivable at December 31, 2020, 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.)