The following information was presented on the balance sheet of Gloria Company as of December 31,2017: ?
$\begin{array}{llr}
\text {Trade accounts receivable, net of allowance for } &\
\text { uncollectibles of $ \$ 100,000 $ } &\$1,600,000\
\end{array}$
Which one of the following statements is true?
A)Gloria expects that $1,700,000 of accounts receivable will be collected after year-end.
B)The balance in the Accounts Receivable account in Gloria's general ledger is $1,600,000.
C)The net realizable value of Gloria's accounts receivable is $1,600,000.
D)Gloria expects to collect only $1,500,000 from its customers.

Question

The following information was presented on the balance sheet of Gloria Company as of December 31,2017: ?
$\begin{array}{llr}
  \text {Trade accounts receivable, net of allowance for   } &\
 \text { uncollectibles of $ \$ 100,000 $ } &\$1,600,000\
\end{array}$
 Which one of the following statements is true?
A)Gloria expects that $1,700,000 of accounts receivable will be collected after year-end.
B)The balance in the Accounts Receivable account in Gloria's general ledger is $1,600,000.
C)The net realizable value of Gloria's accounts receivable is $1,600,000.
D)Gloria expects to collect only $1,500,000 from its customers.

Quizplus · Accepted Answer

The net realizable value (NRV) of accounts receivable is calculated as the total amount of accounts receivable minus any allowances for doubtful accounts. In this case, the balance in the Accounts Receivable account is $1,700,000 and the Allowance for Doubtful Accounts is $100,000, resulting in a net realizable value of $1,600,000. Therefore, option C is the correct answer. Option A and D are both incorrect as they provide estimates of future collections that are not supported by the information given. Option B is also incorrect as it only provides the balance in the Accounts Receivable account and does not take into account any allowances for doubtful accounts.

The Following Information Was Presented on the Balance Sheet of Gloria