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Regent Company which has been in business for three (3) years, makes all sales on...

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Question

Accounting

Regent Company which has been in business for three (3) years, makes all sales on credit and does

not offer cash discount on sales. The companys credit sales, collection from customers, and write- offs of uncollectible accounts for the three years period are given below:

Year

Credit Sales

Collection

Amount

Write-off

1

$ 450,000

$ 424,000

$ 3,200

2

580,000

565,000

5,400

3

650,000

645,000

6,800

Required:

If Regent Company had used the ALLOWANCE METHOD OF ESTIMATING BAD DEBTS

method and had provided for bad debt at the rate of 1% of credit sales:

  1. What is the Net Realizable Value of the Accounts Receivable at the end of the first year of operation?

  1. What is the amount of Allowance for Doubtful Account balance at the end of the second year of operation?

  1. What is the Net Realizable Value of the Accounts Receivable at the end of the second year of operation?

  1. What is the total amount of bad debt written off over the three years of operations?

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