Problem

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

Analysis of accounts receivable and allowance for bad debts—determine ending balances A portion of the current assets section of the December 31, 2010, balance sheet for Gibbs Co. is presented here:

Accounts receivable 

 $63,000

 

Less: Allowance for bad debts 

  (9,000)

 $54,000

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

Sales (all on account)

$480,000

Cash collections from customers 

435,000

Accounts written off 

10,500

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

16,500

Required:

Calculate the net realizable value of accounts receivable at December 31, 2011, 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 Allowancefor Bad Debts accounts.)

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