Determine the net realizable value of accounts receivable on December 31, 2019.
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Extracted text: Problem 5-7 (AICPA Adapted) From inception of operations, Savvy Company carried ne allowance for doubtful accounts. Uncollectible receivables were expensed as written off and recoveries were credited to income as collected. During the current year, management recognized that the accounting policy with respect to doubtful accounts was not correct, and determined that an allowance for doubtful accounte was necessary. A policy was established to maintain an allowance for doubtful accounts based on historical bad debt loss percentage applied to year-end accounts receivable. The historical bad debt loss percentage is to be recomputed each year based on all available past years up to a maximum of five years. Accounts Year Credit sales written off Recoveries 2015 2016 2017 2018 2019 1,500,000 2,200,000 3,000,000 3,300,000 4,000,000 15,000 40,000 50,000 65,000 88,000 2,000 3,000 5,000 10,000 Accounts receivable balances were P1,250,000 and P2,000,000 on January 1, 2019 and December 31, 2019, respectively.