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A company’s customers owe it a total of $10,000 on 12/31/2012. On the same date, the company has an Allowance for Doubtful Accounts of $1,000. How much cash does the company expect to collect from customers that owe it money as of 12/31/2012?

 
 
 
 
 
 
 

The Gross Accounts Receivable is how much the customers owe the company: $10,000. But, the company only expects to collect the Accounts Receivable net of the allowance. Thus, the company expects to collect $10,000 – $1,000 = $9,000.

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