ABC Company had the following information relating to its accounts receivable at December 31, 2024 and for the year ended December 31, 2024: Accounts receivable – December 31, 2023 - 8,000,000; Allowance for doubtful accounts – December 31, 2023 - 1,000,000; Sales (80% credit sales) - 50,000,000; Collections from customers on accounts - 31,000,000; Accounts written off - 2,000,000; Estimated uncollectible receivables per aging on December 31, 2024 - 3,000,000. What is the net realizable value if ABC’s accounts receivable on December 31, 2024?
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
ABC Company had the following information relating to its accounts receivable at December 31, 2024 and for the year ended December 31, 2024: Accounts receivable – December 31, 2023 - 8,000,000; Allowance for doubtful accounts – December 31, 2023 - 1,000,000; Sales (80% credit sales) - 50,000,000; Collections from customers on accounts - 31,000,000; Accounts written off - 2,000,000; Estimated uncollectible receivables per aging on December 31, 2024 - 3,000,000.
What is the net realizable value if ABC’s accounts receivable on December 31, 2024?
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