A company had a balance in Gross Accounts Receivable of $100,000 on 12/31/2011. During 2012, the...

Question:

A company had a balance in Gross Accounts Receivable of $100,000 on 12/31/2011. During 2012, the company had to write-off $1,000 of accounts as uncollectible, and had no recoveries. Its Bad Debt Expense was $2,000 during 2012. Total sales were $800,000 during 2012, all of which were credit sales. It collected $801,000 of cash from customers during 2012. What was the company's balance in Gross Accounts Receivable at 12/31/2012?

Gross Accounts Receivable:


It is the gross of all accounts receivable including bad debts and uncollectible. Net receivables are arrived at after deduction of the former two. Accounts receivable management is a very important procedure that all businesses have to go through.

Answer and Explanation:


Gross accounts receivable in 2011 = $100,000

- Uncollectible accounts = ($1,000)

- Bad debts = ($2,000)

Net accounts receivable in 2012 = $97,000

+ Credit sales in 2012 = $800,000

- Cash collected from customers in 2012 = $801,000

Gross accounts receivable in 2012 = $96,000

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Learn more about this topic:

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Accounts Receivable: Definition, Process & Examples

from Accounting 101: Financial Accounting

Chapter 7 / Lesson 1
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