Question

Question Help Verdant Vines specializes in cultivating rootstock for grape vines. The company sells to both vineyards and consumers. At the beginning of the year, the company had $170,000 in accounts receivable before netting out $18,000 of allowance for doubtful accounts. At the end of the year, the corresponding amounts were $125.000 and $14,000, respectively. The company's sales in the year totalled $7,640,000, of which $7.220,000 was sold on credit. During the year, the company estimated bad debt expense using the percentage of sales method, and at the end of the year, recorded a further $6,500 of bad debis expense by applying the aging method wie- amounted to $41,000 Required: Determine the amount of cash collected from customers and the percentage the company used to estimate bad debit expense Requirement. Determine the amount of cash collected from customers and the percentage the company used to estimate bad debt expense First, enter the values given and balance the AR account

Answer 1

Amount of cash collected from customers: $ 7,224,000.

The percentage the company used to estimate bad debt expense = $ 30,500 / $ 7,220,000 * 100 = 0.42 %

Accounts Receivable
Beginning balance			$ 170,000 Dr.
Credit Sales	7,220,000
Write-offs		41,000
Cash collected on A/R		7,224,000
Ending balance			125,000 Dr.
Allowance for Doubtful Accounts
Beginning balance			$ 18,000 Cr.
Write-offs	41,000
Bad debt expense		30,500
Bad debt expense at Y/E		6,500
Ending balance			14,000 Cr.