At the beginning of Year 3 Omega Company had a $60,000 balance in its accounts receivable account and a $3,000 balance in allowance for doubtful accounts. During Year 3, Omega experienced the following events.(1)Omega earned $200,000 of revenue on account(2)Collected $210,000 cash from accounts receivable(3)Wrote-off $2,000 of accounts receivable as uncollectibleOmega estimates uncollectible accounts to be 4% of receivables. Based on this information, the amount of net realizable value of receivables shown on the Year 3 balance sheet is

Question

Quizplus · Accepted Answer

The net realizable value of receivables is the amount of accounts receivable that Omega expects to collect. To calculate this, we need to start with the beginning balance of accounts receivable and add the revenue earned on account during the year. Then, we need to subtract the amount of accounts receivable that were written off as uncollectible. Finally, we need to adjust the remaining balance for the estimated uncollectible accounts.Beginning balance of accounts receivable: $60,000Revenue earned on account: $200,000Accounts receivable written off: $2,000Estimated uncollectible accounts: 4% of $210,000 = $8,400Net realizable value of receivables: $60,000 + $200,000 - $2,000 - $8,400 = $46,080

At the Beginning of Year 3 Omega Company Had a $60,000