Question

2 Sirus Company began Year 2 with balances in accounts receivable and allowance for doubtful accounts of $44,300 and $1,675, respectively. The company reported credit sales of $490,250 during the year, and wrote off $1,400 of uncollectible accounts. Sirus Company prepared the following aging schedule on December 31, Year 2: Number of Days Receivables % Likely to be Past Due Amount Uncollectible Current S 24,750 1% 0-30 8,300 5% 31-60 9,000 10% 61-90 2,150 25% Over 90 1,750 50% Total $ 45,950 Required: (Show all your work-Answers need to be supported or you will lose points.)(10 points) a) Compute the amount of cash collected from accounts receivable. b) Compute the uncollectible accounts expense. | c) Determine the net realizable value of accounts receivable.

Answer 1

(a) Cash collected from accounts receivables:

Beginning Accounts receivables	44,300
Credit sales	490,250
Accounts receivables w/o	(1,400)
Ending accounts receivables	(45,950)
Cash collected from accounts receivables	487,200

Cash collected from accounts receivables: $ 487,200

(b) Uncollectible accounts expense:

Number of days past due	Receivables amount	% likely to be uncollectible	Uncollectible amount
Current	24,750	1%	247.5
0 - 30	8,300	5%	415
31 - 60	9,000	10%	900
61 - 90	2,150	25%	537.5
Over 90	1,750	50%	875
	45,950		2,975

Uncollectible accounts expense: 2,975 - (1,675 - 1,400) = $ 2,700

(c) Net realizable value of accounts receivables:

= Ending accounts receivables - Allowance for doubtful accounts

= 45,950 - 2,975

= 42,975

Net realizable value of accounts receivables: $ 42,975