Before year-end adjusting entries, Dunn Company's account balances at December 31, 2010, for accounts receivable and the related allowance for uncollectible accounts were $600,000 and $45,000, respectively.An aging of accounts receivable indicated that $62,500 of the December 31 receivables are expected to be uncollectible.The cash realizable value of accounts receivable after adjustment is

Question

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Before adjustment, the net accounts receivable balance was $555,000 ($600,000 - $45,000).
After the adjustment, the allowance for uncollectible accounts is increased by $17,500 ($62,500 - $45,000), bringing the balance to $62,500.
The cash realizable value of accounts receivable after adjustment is calculated as: 
Net accounts receivable balance ($600,000 - $62,500) = $537,500. 
Therefore, the answer is B.

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