Question

A portion of the current assets section of the December 31, 2019, balance sheet for Gibbs Co. is presented here: Accounts receivable Less: Allowance for bad debts $ 20,100 (3,900) $16,200 The company's accounting records revealed the following information for the year ended December 31, 2020: Sales (all on account) Cash collections from customers Accounts written oft Bad debts expense (accrued at 12/31/20) $ 171,500 151,000 3,400 5,400 Required: Calculate the net realizable value of accounts receivable at December 31, 2020, and prepare the appropriate balance sheet presentation for Gibbs Co. as of that point in time. (Hint Use T-accounts to analyze the Accounts Receivable and Allowance for Bad Debts accounts.) At December 31, 2020 Accounts receivable Less: Allowance for bad debts Accounts receivable (Net)

Answer 1

Account Receivables
Balance b/f	20,100	Cash	1,51,000
Credit Sales	1,71,500	Allowance for bad debts	3,400
		Balance c/f	37,200
	1,91,600		1,91,600
Allowance for bad debts
Account Rece (Write off)	3,400	Balance b/f	3,900
Balance c/f	5,900	Bad Debt expense	5,400
	9,300		9,300
Balance Sheet at December 31,2020
Account receivables		37,200
Less: Allowance for bad debts	-5,900	31,300