Vancouver Company Began Year 2 with Balances in Accounts Receivable

question 87

Essay

Vancouver Company began Year 2 with balances in accounts receivable and allowance for doubtful accounts of $92,800 and $9,280, respectively. The company reported credit sales of $875,550 during the year, collected $870,200, and wrote off $6,800 of uncollectible accounts. Vancouver estimates that 10% of its accounts receivable balance will be uncollectible.Required:What will Vancouver report as its allowance for doubtful accounts on December 31, Year 2?Compute uncollectible accounts expense for Year 2.Calculate Vancouver's net realizable value of accounts receivable on December 31, Year 2.

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Definitions:

Credit Memo

A document issued by a seller to a buyer, reducing the amount owed by the buyer under certain circumstances, such as returned goods or an overcharge.

Debit Memo

A document issued by a seller of goods or services to a buyer, reducing the amount the buyer owes under the original invoice.

General Ledger

An exhaustive list of every financial transaction made by a company during its history, categorized by accounts.

Canceled Checks

Checks that have been paid by the bank and voided, serving as proof that payment was made.