Answer:
The Underwood Corporation
Net Accounts Receivable:
2021 = $7,975 ($14,500 - $6,525)
2022: = $3,200 ($9,500 - $6,300)
Explanation:
a) Data and Calculations:
Accounts Receivable during year 2021 = $32,000
September 17, 2021 Cash received (17,500)
December 31, 2021 Balance = $14,500
March 4, 2022 Services on account = 47,000
May 20, 2022 Cash received (10,000)
Bad Debts written off (4,500)
October 19, 2022 Cash received (37,500)
December 31, 2022 Balance = $9,500
Allowance for Doubtful Accounts
December 31, 2021 = $6,525 ($14,500 * 45%)
Bad Debts written off (4,500)
December 31, 2022 = $4,275 ($9,500 * 45%)
December 31 Balance $6,300
b) The net accounts receivable is equal to the Balance of the Accounts Receivable minus the Allowance for Doubtful Accounts (all at December 31) for each year.