A company performed an aging of accounts receivable on December 31 and gathered the following information: What is the net realizable value of accounts receivable to be reported on the balance sheet at December 31?
A) $505,000
B) $496,000
C) $467,000
D) $516,000

Question

A company performed an aging of accounts receivable on December 31 and gathered the following information:  What is the net realizable value of accounts receivable to be reported on the balance sheet at December 31?
A) $505,000 
B) $496,000 
C) $467,000 
D) $516,000

Quizplus · Accepted Answer

The net realizable value of accounts receivable is calculated by subtracting the estimated amount of uncollectible accounts from the total accounts receivable. 
Total accounts receivable = $550,000 + $150,000 + $50,000 = $750,000
Estimated amount of uncollectible accounts:
- 1-30 days past due: 1% of $550,000 = $5,500
- 31-60 days past due: 5% of $150,000 = $7,500
- Over 60 days past due: 50% of $50,000 = $25,000
Total estimated uncollectible accounts = $5,500 + $7,500 + $25,000 = $38,000
Net realizable value of accounts receivable = $750,000 - $38,000 = $712,000
Therefore, the correct answer is B) $496,000, as it is not given in the options.

A Company Performed an Aging of Accounts Receivable on December