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10 October, 10:30

At the close of its first year of operations, December 31, 2010, Ming Company had accounts receivable of $540,000, after deducting the related allowance for doubtful accounts. During 2010, the company had charges to bad debt expense of $90,000 and wrote off, as uncollectible, accounts receivable of $40,000. What should the company report on its balance sheet at December 31, 2010, as accounts receivable before the allowance for doubtful accounts?

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  1. 10 October, 10:51
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    The company report on its balance sheet at December 31, 2010, as accounts receivable before the allowance for doubtful account is $590,000

    Explanation:

    The computation of the accounts receivable before the allowance is shown below:

    = Beginning account receivable balance + bad debt expense - uncollectible accounts receivable

    = $540,000 + $90,000 - $40,000

    = $590,000

    The bad debt is an expense so it will be added whereas the account receivable which is not yet collected should be deducted in the computation part.
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