John Den Bear Company had a $150,000 beginning balance in Accounts Receivable and a $6,000 credit balance in the Allowance for Doubtful Accounts. During the year, credit sales were $600,000 and customers’ accounts collected were $590,000. Also, $4,000 in worthless accounts were written off. What was the net amount of receivables included in the current assets at the end of the year, before any provision was made for doubtful accounts? Select one:

The correct answer is $154,000.

Explanation:

According to the scenario, the computation of the given data are as follows:

We can calculate the net amount of receivables by using following formula:

Net receivables = Accounts receivable account - Allowance accounts

So, Accounts receivable = Beginning balance + credit sales - cash collected - Amount written off

= $150,000 + $600,000 - $590,000 - $4000

= $156,000

And Allowance accounts = Beginning allowance account - amount written off

= $6,000 - $4,000

= $2,000

Now by putting the value, we get

Net receivables = $156,000 - $2,000

= $154,000.

Hence, the net amount of receivables is $154,000.

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