Problem

Analysis of accounts receivable and allowance for bad debts—determine beginning balances A...

Analysis of accounts receivable and allowance for bad debts—determine beginning balances A portion of the current assets section of the December 31, 2011, balance sheet for Carr Co. is presented here:

Accounts receivable

  $50000

 

Less: Allowance for bad debts

  (7,000)

 $43,000

The company’s accounting records revealed the following information for the year ended December 31, 2011:

Sales (all on account)

$400,000

Cash collections from customers

410,000

Accounts written off 

15000

Bad debts expense (accrued at 12/31/11)

12000

Required:

Using the information provided for 2011, calculate the net realizable value of accounts receivable at December 31, 2010, and prepare the appropriate balance sheet presentation for Carr Co., as of that point in time. (Hint: Use T-accounts to analyze the Accounts Receivable and Allowance for Bad Debts accounts. Remember that you are solving for the beginning balance of each account.)

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