On Cairo Corp.'s December 31, 2020 statement of financial position, the current receivables consisted of the following:
$\begin{array}{llcc}
\text { Trade accounts receivable } &\$74,000 \
\text {Allowance for doubtful accounts } &(3,500)\
\text { Claim against shipper for goods lost in transit (Nov. 2020). } &4,000 \
\text { Selling price of unsold goods sent by Cairo on consignment } &\
\text { at 130 percent of cost (not included in Cairo's ending inventory) } &29,000\
\text {Security deposit on lease of warehouse used for storing } &\
\text {some inventories. } &\underline{24,000}\
\text {Total } &\underline{\$127,500}\
\end{array}$
At December 31, 2020, the correct total of Cairo's current net receivables was

Question

On Cairo Corp.'s December 31, 2020 statement of financial position, the current receivables consisted of the following: 
$\begin{array}{llcc}
 \text { Trade accounts receivable } &\$74,000  \  
 \text {Allowance for doubtful accounts  } &(3,500)\
 \text { Claim against shipper for goods lost in transit (Nov. 2020). } &4,000  \
 \text { Selling price of unsold goods sent by Cairo on consignment } &\
 \text {  at 130 percent of cost (not included in Cairo's ending inventory) } &29,000\
 \text {Security deposit on lease of warehouse used for storing  } &\
 \text {some inventories.  } &\underline{24,000}\
 \text {Total  } &\underline{\$127,500}\
\end{array}$
 At December 31, 2020, the correct total of Cairo's current net receivables was

Quizplus · Accepted Answer

To find the current net receivables, we need to subtract the allowance for doubtful accounts and the claim against the shipper from the trade accounts receivable. We also need to exclude the selling price of the unsold goods sent on consignment and the security deposit on the warehouse lease, as these are not actual receivables.

So, the calculation is as follows:

$74,000 (trade accounts receivable) 
- $3,500 (allowance for doubtful accounts) 
- $4,000 (claim against shipper) 
= $66,500 (actual receivables)

Therefore, the correct total of Cairo's current net receivables is $66,500. However, the total given in the question is $127,500 because it includes the unsold goods sent on consignment and the security deposit on the warehouse lease. This is why we need to exclude those amounts to get the actual net receivables.

The only choice that matches the correct answer is B, $74,500. This may be confusing because it includes the selling price of the unsold goods on consignment, but it also excludes the security deposit. However, as mentioned earlier, the selling price of the consignment goods is not an actual receivable, so it should be excluded.

On Cairo Corp At December 31, 2020, the Correct Total of Cairo's Current