On January 1, Year 2, Kincaid Company's Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $31,000 and $500, respectively. During the year Kincaid reported $72,500 of credit sales. Kincaid wrote off $550 of receivables as uncollectible in Year 2. Cash collections of receivables amounted to $74,550. Kincaid estimates that it will be unable to collect one percent (1%) of credit sales. The net realizable value of receivables appearing on Kincaid's Year 2 balance sheet will amount to:

Question

Quizplus · Accepted Answer

$31,000 beginning balance + $72,500 credit sales - $74,550 collections - $550 write-offs = $28,400 ending accounts receivable balance; $500 beginning allowance balance + $725 uncollectible account expense - $550 write-offs = $675 ending allowance balance; $28,400 accounts receivable - $675 allowance = $27,725 net realizable value