Problem 5

The December 31, 2019 adjusted trial balance of Leah Company shows the following:
Debit Credit
Accounts Receivable 50,000
Allowance for bad debts 2,000
Additional information:
 Cash sales of the company represents 10% of gross sales
 90% of the credit sales customers do not take advantage of the 2/10, n/30 terms.
 It is expected that cash discounts of 300 will be taken on accounts receivable outstanding at
December 31, 2020
 Sales return in 2020 amounted to 20,000. All returns were from charge sales
 During 2020, accounts totaling 2,200 were written off as uncollectible; bad debts recoveries
during the year amounted to 150.
 The allowance for bad debts is adjusted so that it represents a certain percentage of the
outstanding accounts receivable at year end. The required percentage at December 31, 2020 is
150% of the rate used in December 31, 2019
 The accounts receivable balance at year end is 100,000

Compute for the net realizable value of the receivable on December 31, 2020