Before year-end adjusting entries, Dunn Company's account balances at December 31, 2014, for accounts receivable and the related allowance for uncollectible accounts were $1,200,000 and $90,000, respectively. An aging of accounts receivable indicated that $125,000 of the December 31 receivables are expected to be uncollectible. The net realizable value of accounts receivable after adjustment is

Question

Quizplus · Accepted Answer

To calculate the net realizable value of accounts receivable after adjustment, we need to subtract the allowance for uncollectible accounts from the accounts receivable balance, and then subtract the estimated amount of uncollectible accounts from that sum.

Accounts Receivable balance: $1,200,000 
Less: Allowance for Uncollectible Accounts balance: $90,000 
= Net Accounts Receivable before adjustment: $1,110,000

Net Accounts Receivable before adjustment: $1,110,000 
Less: Estimated Uncollectible Accounts: $125,000 
= Net Realizable Value of Accounts Receivable after adjustment: $985,000

Therefore, the correct answer is B) $1,075,000.

Before Year-End Adjusting Entries, Dunn Company's Account Balances at December