Reference no: EM132691089

At the beginning of the year, Health Products Corp. has a balance of $2,680,000 in accounts receivable and $250,000 in the allowance for doubtful accounts. Sales for the year were $18,900,000, of which 70% were on credit. Cash payments on account were $11,530,000. Sales returns were $420,000. Accounts of $102,700 were written off, but $27,500 was subsequently recovered and collected. This $27,500 cash payment was in addition to the collections previously mentioned. At year-end, a review indicated that 5% of outstanding accounts receivable were uncollectible, but that there was no risk of further sales returns.

Required:

Problem 1: Show how net accounts receivable would be reported on the statement of financial position, and calculate bad debt expense for the year.