Royal Carpet Company’s

Royal Carpet Company’s

account and accounts receivable.
Accounts receivable balance, January 1, 2010 $ 64,500
Allowance for doubtful accounts, January 1, 2010 2,800
Sales on account, 2010 756,000
Cost of goods sold, 2010 505,000

Royal Carpet Company’s

Collections of accounts receivable, 2010 782,000
After several collection attempts, Royal Carpet Company wrote off $2,600 of accounts that could not be collected. Royal estimates that bad debts expense will be 0.5 percent of sales on account.
Required
a. Compute the following amounts.
(1) Using the allowance method, the amount of uncollectible accounts expense for 2010.
(2) Net realizable value of receivables at the end of 2010.
b. Explain why the uncollectible accounts expense amount is different from the amount that was written off as uncollectible.

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