Question

Reporting allowance for doubtful accounts LO P2 On December 31 of Swift Co.'s first year, $70,000 of accounts receivable is not yet collected. Swift estimates that $4,000 of its accounts receivable is uncollectible and records the year-end adjusting entry. Compute the realizable value of accounts recelvable reported on Swift's year-end balance sheet.

Answer 1

Swift Co. has $70,000 in accounts receivable and estimates $4,000 uncollectible. Subtract the allowance to find the realizable value of $66,000 for the accounts receivable on the balance sheet.

Step-by-step explanation:

The question is focused on calculating the realizable value of accounts receivable for Swift Co. The company has $70,000 in accounts receivable at year-end and estimates $4,000 as uncollectible. To compute the realizable value, one must subtract the allowance for doubtful accounts from the total accounts receivable amount.

The calculation is as follows:
Total Accounts Receivable: $70,000
Less: Allowance for Doubtful Accounts: $4,000
Realizable Value of Accounts Receivable: $66,000

Thus, the realizable value of accounts receivable that will be reported on Swift Co.'s balance sheet at year-end is $66,000. This figure is the estimated amount that the company expects to collect and reflects a more accurate representation of its financial position.