what is the net realizable value of the accounts receivable at december 31 2011 650281

Accounting for uncollectible accounts: percent of receivables allowance method

Posey Service Co. experienced the following transactions for 2011, its first year of operations:

1. Provided $72,000 of services on account.

2. Collected $56,000 cash from accounts receivable.

3. Paid $30,000 of salaries expense for the year.

4. Posey adjusted the accounts using the following information from an accounts receivable aging schedule.

Number of Days		Percent Likely to	Allowance
Past Due	Amount	Be Uncollectible	Balance
Current	$12,000	.01
0–30	2,000	.05
31–60	500	.10
61–90	500	.30
Over 90 days	1,000	.50

Required

a. Organize the information in accounts under an accounting equation.

b. Prepare the income statement for Posey Service Co. for 2011.

c. What is the net realizable value of the accounts receivable at December 31, 2011?