Question

Carson Company began operations on February 1, 2016, and experienced the following events during the year: 1. Earned $150,000 of revenue on account 2. Collected $125,000 cash from accounts receivable 3. Paid $55,000 cash for salaries expense 4. Adjusted the accounting records to reflect management's belief that $3,000 of the accounts receivable balance would be uncollectible. Carson uses the allowance method of accounting for bad debts. What is Carson Company's net realizable value of the accounts receivable at the end of 2016?

Answer 1

What is Carson Company's net realizable value of the accounts receivable at the end of 2016?

Dr Accounts receivable $ 22,000

Step-by-step explanation:

1. Earned $150,000 of revenue on account

Dr Accounts receivable $ 150,000

Cr Sales $ 150,000

2. Collected $125,000 cash from accounts receivable

Dr CASH $ 125,000

Cr Accounts receivable $ 125,000

Adjusted the accounting records to reflect management's belief that $3,000 of the accounts receivable balance would be uncollectible.

Dr Bad Debt Expense $ 3,000

Cr Allowance for Uncollectible Accounts $ 3,000

What is Carson Company's net realizable value of the accounts receivable at the end of 2016?

Dr Accounts receivable $ 22.000

The net realizable value of the accounts have to consider the estimated value that would be uncollectible, this case :

$150,000 Credit Sales

-$125,000 Cash from Accounts Receivable

-$ 3,000 Accounts Receivable balance that would be uncollectible.

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$ 22,000 ==> Net realizable value of the accounts receivable