Analysis of accounts receivable and allowance for bad debts determine ending balances. A portion of the current assets section of the December 31, 2013, balance sheet for Gibbs Co. is presented here:
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The company's accounting records revealed the following information for the year ended December 31, 2014:
Sales (all on account) . . . . . . . . . . . . . . . . . . . . . . . . . . $2,400,000
Cash collections from customers . . . . . . . . . . . . . . . . . 2,175,000
Accounts written off . . . . . . . . . . . . . . . . . . . . . . . . . . 52,500
Bad debts expense (accrued at 12/31/14) . . . . . . . . . . 82,500
Required:
Calculate the net realizable value of accounts receivable at December 31, 2014, and prepare the appropriate balance sheet presentation for Gibbs Co., as of that point in time.