Question

Funn Company's account balances at December 31, 2020, for accounts receivable and the related allowance for uncollectible accounts were $1,500,000 and $90,000, respectively. An aging of accounts receivable indicated that $125,000 of the December 31 receivables are expected to be uncollectible. The accounts receivable amount expected to be collected after adjustment is A. $1,285,000. B. $1,410,000. C. $1,465,000. D. $1,375,000.

Answer 1

D. $1,375,000.

Step-by-step explanation:

Funn Company's

Account balances

At December 31, 2020,

Accounts receivable $1,500,000

Allowance for uncollectible accounts $90,000

Bad Debts December 31 $125,000

When the allowance for uncollectible method is used only the allowance for uncollectibles is deducted for the accounts receivable for financial statements

$1,500,000 - $90,000=$ 1410,000

But as the Bad debts ( uncollectibles) is higher than the allowance for uncollectibles the bad debts will be deducted from the accounts receivables.

The allowance of uncollectibles will be raised to the amount of bad debts.

so the the accounts receivable amount expected to be collected after adjustment is $1,500,000 - $125,000=$ 1375,000

Answer 2

D. $1,375,000

Step-by-step explanation:

Funn Company's

(NRV of receivables= Receivables- Ending receivable uncollectible

ADA =$1,500,000−$125,000

= $1,375,000

Therefore the accounts receivable amount expected to be collected after adjustment is $1,375,000.