Liberty Company estimates that its annual bad debts approximate 4% of credit sales. Liberty had the following balances at year-end prior to recording adjusting entries:

Credit Sales $160,000
Trade Receivables $30 ,000
Allowance for Doubtful Accounts $100 (debit balance)

-Liberty estimates that its annual bad debts approximate 4% of credit sales. What would the net realizable value of the receivables on Liberty's year-end balance sheet be?
A) $23,500.
B) $23,600.
C) $23,700.
D) $29,900.

Question

Liberty Company estimates that its annual bad debts approximate 4% of credit sales. Liberty had the following balances at year-end prior to recording adjusting entries:
 
Credit Sales $160,000
Trade Receivables $30 ,000
Allowance for Doubtful Accounts $100 (debit balance)

-Liberty estimates that its annual bad debts approximate 4% of credit sales. What would the net realizable value of the receivables on Liberty's year-end balance sheet be?
A) $23,500.
B) $23,600.
C) $23,700.
D) $29,900.

Quizplus · Accepted Answer

Calculation: $30,000 - (-$100 + $6,400) = $23,700.

Liberty Company Estimates That Its Annual Bad Debts Approximate 4