Question

Chez fred bakery estimates the allowance for uncollectible accounts at 3% of the ending balance of accounts receivable. during 2024, chez fred's credit sales and collections were $125,000 and $131,000, respectively. what was the balance of accounts receivable on january 1, 2024, if $180 in accounts receivable were written off during 2024 and if the allowance account had a balance of $750 on december 31, 2024?

Answer 1

To calculate the balance of accounts receivable on January 1, 2024, we need to consider the credit sales, collections, write-offs, and the balance of the allowance account. The beginning balance can be calculated using the formula: Beginning balance + Credit sales - Collections - Write-offs = Ending balance.

Step-by-step explanation:

To calculate the balance of accounts receivable on January 1, 2024, we need to consider the credit sales, collections, write-offs, and the balance of the allowance account. The formula to calculate the balance of accounts receivable is:

Beginning balance + Credit sales - Collections - Write-offs = Ending balance

Given that the credit sales were $125,000, collections were $131,000, write-offs were $180, and the allowance account balance was $750, we can solve the equation:

Beginning balance + $125,000 - $131,000 - $180 = $750

Simplifying the equation:

Beginning balance = $131,000 - $125,000 - $180 + $750 = $31,570

Therefore, the balance of accounts receivable on January 1, 2024, was $31,570.