Answer:
The net realizable value of receivables that will be reported on the balance sheet at December 31, Year 1 is $30,400
Explanation:
The company estimates that it will be unable to collect 1% of revenue on account.
Estimated uncollectible = 1% x $160,000 = $1,600
The entry to record bab debts expense:
Debit bab debts expense $1,600
Credit Allowance for doubtful accounts $1,600
Hancock Medical Supply Co., earned $160,000 of revenue on account and collected $128,000 of cash from its receivables accounts.
The balance of Accounts receivable at Accounts receivable (balance) = $160,000 - $128,000 = $32,000
Net realizable value of receivablese = Accounts receivable (balance)- Allowance for doubtful accounts (balance) = $32,000 - $1,600 = $30,400
