Mosaic’s Company balance sheet at December 31, 2019, reported the following: Accounts receivable...........................................$2,500,000 Allowance for uncollectible accounts...................$66,600 The following are the transactions to be taken into consideration for 2019:a. Total credit sales for 2019 were $3,600,000.b. 2% of sales were estimated to be uncollectible. c. The company received cash payments on account during 2019 for $1,000,000d. Accounts receivable identified to be uncollectible totaled $94,000. e. December 31, 2019, aging of receivables indicates that $75,000 of the receivables is uncollectible. Requirements: 1. What was the net realizable value of the receivables as at December 31, 2019? 2. Prepare the journal entries for the company’s 2019 transactions. 3. Prepare the Accounts receivable and the Allowance for uncollectible Accounts Taccounts based on the information presented above. (Note: The opening balances and the transactions from the journal entries must be recorded in their respective accounts) 4. What is the net realizable value of receivables as at December 31, 2019? (Show workings)
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Mosaic’s Company
Allowance for uncollectible accounts...................$66,600
The following are the transactions to be taken into consideration for 2019:
a. Total credit sales for 2019 were $3,600,000.
b. 2% of sales were estimated to be uncollectible.
c. The company received cash payments on account during 2019 for $1,000,000
d. Accounts receivable identified to be uncollectible totaled $94,000.
e. December 31, 2019, aging of receivables indicates that $75,000 of the receivables is uncollectible.
Requirements:
1. What was the net realizable value of the receivables as at December 31, 2019?
2. Prepare the
3. Prepare the Accounts receivable and the Allowance for uncollectible Accounts Taccounts based on the information presented above. (Note: The opening balances and the transactions from the journal entries must be recorded in their respective accounts)
4. What is the net realizable value of receivables as at December 31, 2019? (Show workings)
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 3 images
