A company had a balance in Gross Accounts Receivable of $200,000 on 12/31/2011. The balance in Gross Accounts Receivable was $300,000 on 12/31/2012. During 2012, the company had to write-off $10,000 of accounts as uncollectible, and had no recoveries.
In the A/R T-account, we have Beginning Balance + Sales – Collections – Write-offs = Ending Balance. Note that Bad Debt Expense does not affect the balance of A/R. Filling in what we know: $200,000 + $1,000,000 – Collections – $10,000 = $300,000. So, Collections = $200,000 + $1,000,000 – $10,000 – $300,000 = $890,000.
