The statement of financial position for Sand Inc. showed the following at December 31, 2022. ASSETS Current Cash Accounts receivable Less: allowance for doubtful accounts Common shares Retained earnings $300,000 (30,000) SHAREHOLDERS' EQUITY $100,000 270,000 $370,000 $250,000 120,000 $370,000 During 2023, there were $4,000,000 of sales. 20% were collected in cash at the time of sale. 80% of sales were on account. Some of these were collected in cash by year-end. $40,000 of accounts were written off as uncollectible. Management estimates the allowance for doubtfu accounts at 4% of outstanding accounts receivable. Bad debt expense for 2023 amounted to $90,000. There were no other expenses. Required: 1. Calculate the net realizable value of accounts receivable at December 31, 2023. 2. Calculate 2023 cash flow from operations.
The statement of financial position for Sand Inc. showed the following at December 31, 2022. ASSETS Current Cash Accounts receivable Less: allowance for doubtful accounts Common shares Retained earnings $300,000 (30,000) SHAREHOLDERS' EQUITY $100,000 270,000 $370,000 $250,000 120,000 $370,000 During 2023, there were $4,000,000 of sales. 20% were collected in cash at the time of sale. 80% of sales were on account. Some of these were collected in cash by year-end. $40,000 of accounts were written off as uncollectible. Management estimates the allowance for doubtfu accounts at 4% of outstanding accounts receivable. Bad debt expense for 2023 amounted to $90,000. There were no other expenses. Required: 1. Calculate the net realizable value of accounts receivable at December 31, 2023. 2. Calculate 2023 cash flow from operations.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Munabhai
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The statement of financial position for Sand Inc. showed the following at December 31, 2022.
ASSETS
Current
Cash
Accounts receivable
Less: allowance for doubtful accounts
Common shares
Retained earnings
$300,000
(30,000)
SHAREHOLDERS' EQUITY
$100,000
270,000
$370,000
$250,000
120,000
$370,000
During 2023, there were $4,000,000 of sales. 20% were collected in cash at the time of sale.
80% of sales were on account. Some of these were collected in cash by year-end. $40,000 of
accounts were written off as uncollectible. Management estimates the allowance for doubtful
accounts at 4% of outstanding accounts receivable. Bad debt expense for 2023 amounted to
$90,000. There were no other expenses.
Required:
1. Calculate the net realizable value of accounts receivable at December 31, 2023.
2. Calculate 2023 cash flow from operations.
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