Question

at december 31, 2021, before any year-end adjustments, the accounts receivable balance of foley service, inc., is \\$350,000. the allowance for uncollectible accounts has a(n) \\$20,900 credit balance. foley service prepares the following aging schedule for accounts receivable:
(click the icon to view the aging schedule.)
read the requirements.

journal entry
date: dec 31
accounts: uncollectible-account expense
debit: 5,200
accounts: allowance for uncollectible accounts
credit: 5,200

now, prepare a t-account for the allowance.
allowance for uncollectible accounts
bal before adj: 20,900
adj entry: 5,200
bal after adj: 26,100

requirement 3. show how foley service will report accounts receivable on its december 31 balance sheet.
first show the single line presentation.
balance sheet (partial):
current assets:
accounts receivable, net of allowance for uncollectible accounts of \\$26,100: \\$323,900
now show the detail presentation.
balance sheet (partial):

Explanation:

🆕 New Concept Discovered: Balance Sheet Presentation of Receivables
Reporting net realizable value of accounts receivable.

Step 1: Identify the required presentation format

We need to show the detailed presentation of Accounts Receivable on the partial balance sheet as of December 31.

In a detailed presentation, Accounts Receivable is listed at its gross value, and the Allowance for Uncollectible Accounts is subtracted from it to arrive at the Net Accounts Receivable (Net Realizable Value).

Step 2: Gather the values

From the problem description and previous steps:

• Accounts Receivable (Gross): \( \$350,000 \)
• Allowance for Uncollectible Accounts (Ending Balance): \( \$26,100 \)

Step 3: Calculate the Net Accounts Receivable

Subtract the allowance balance from the gross accounts receivable balance:

$$ \text{Net Accounts Receivable} = \$350,000 - \$26,100 = \$323,900 $$

Step 4: Format the detailed presentation

The detailed presentation on a partial balance sheet is structured as follows:

• Current assets:
• Accounts receivable: \( \$350,000 \)
• Less: Allowance for uncollectible accounts: \( (\$26,100) \) (or simply \( 26,100 \) in the subtraction column)
• Accounts receivable, net: \( \$323,900 \)

Answer:

Balance Sheet (Partial):

Current assets:

• Accounts receivable: $350,000
• Less: Allowance for uncollectible accounts: (26,100)
• Accounts receivable, net: $323,900