Vulcan Service Co. experienced the following transactions for Year 1, its first year of operations: Provided $91,000 of services on account. Collected $72,000 cash from accounts receivable. Paid $36,000 of salary expense for the year. Adjusted the accounts using the following information from accounts receivable aging schedule:
Number of Days Past Due Amount Percent Likely to Be Uncollectible Allowance Balance
Current $24,864 0.01
0-30 1,680 0.05
31-60 2,352 0.10
61-90 2,016 0.30
Over 90 days 2,688 0.50
Required:
a. Record the above transactions in general journal form and post to T-accounts.
b. Prepare the income statement for Vulcan Service Co. for Year 1.
c. What is the net realizable value of the accounts receivable at December 31, Year 1?