Question

Wechsler Company uses the aging of accounts receivable method. The company performed an aging of accounts receivable on December 31 and gathered the following information:

-Accounts receivable=$605,000
-Unadjusted Credit balance in Allowance for Doubtful Accounts=$84,000
-Estimated Uncollectible Accounts Receivable=$93,000
What is the amount of Accounts Receivable, Net that will be reported on the balance sheet at December 31?
a. $596,000
b. $512,000
c. $521,000
d. $419,000

Answer 1

The Accounts Receivable, Net on the balance sheet will be $512,000 after adjusting the Allowance for Doubtful Accounts by the required $9,000 to reach the estimated uncollectible accounts of $93,000.

Step-by-step explanation:

The amount of Accounts Receivable, Net that will be reported on the balance sheet at December 31 by the Wechsler Company is calculated by subtracting the estimated uncollectible accounts receivable from the total accounts receivable. With an accounts receivable of $605,000 and an estimated uncollectible accounts receivable of $93,000, we adjust the existing unadjusted credit balance in the Allowance for Doubtful Accounts of $84,000. The adjustment amount needed is the difference between the estimated uncollectible accounts ($93,000) and the existing allowance ($84,000), which is $9,000. Therefore, the Accounts Receivable, Net is $605,000 (total accounts receivable) - $93,000 (adjusted allowance for doubtful accounts) = $512,000. The correct answer is option b. $512,000