The Miller Company earned $117,000 of revenue on account during Year 1. There was no beginning balance in the accounts receivable and allowance accounts. During Year 1, Miller collected $79,000 of cash from its receivables accounts. The company estimates that it will be unable to collect 3% of its sales on account.What is the net realizable value of Miller's receivables at the end of Year 1?

Question

Quizplus · Accepted Answer

The net realizable value is calculated as the ending accounts receivable minus the allowance for doubtful accounts. Ending accounts receivable is $117,000 - $79,000 = $38,000. The allowance for doubtful accounts is 3% of $117,000, which is $3,510. Therefore, the net realizable value is $38,000 - $3,510 = $34,490.

The Miller Company Earned $117,000 of Revenue on Account During