Net Accounts Receivable: Percentage of Sales Method Video Lessons

Concept

# Problem: On January 1, 2005, ABC Company had accounts receivable of $98,000 and an allowance for doubtful accounts with a credit balance of$17,000. During 2005, ABC Company reported sales (all on account) of $850,000; collected$625,000 cash from its credit customers; and wrote-off $12,000 of accounts receivable as uncollectible$12,000. ABC Company uses the net credit sales method to estimate bad debt expense and estimated bad debt expense for 2005 as 4% of net credit sales. Calculate the net realizable value of ABC Company's accounts receivable at  December 31, 2005.

###### Problem Details

On January 1, 2005, ABC Company had accounts receivable of $98,000 and an allowance for doubtful accounts with a credit balance of$17,000. During 2005, ABC Company reported sales (all on account) of $850,000; collected$625,000 cash from its credit customers; and wrote-off $12,000 of accounts receivable as uncollectible$12,000. ABC Company uses the net credit sales method to estimate bad debt expense and estimated bad debt expense for 2005 as 4% of net credit sales.

Calculate the net realizable value of ABC Company's accounts receivable at  December 31, 2005.