Mellon Corporation
The data presented below are for Mellon Corporation for the year ended December 31,2017:
??
$\begin{array}{lr}
\text { Sales (100\% on credit) } & \$ 1,500,000 \
\text { Sales returns } & 60,000 \
\text { Accounts receivable (December 31, 2017) } & 250,000 \
\text { Allowance for doubtful accounts (credit balance) (before adjustment at December } & \
31,2017 & 3,000 \
\text { Estimated amount of uncoll ectible accounts based on an aging analysis } & 31,000
\end{array}$
-Refer to the information for Mellon Corporation. ?
If Mellon uses the aging of accounts receivable approach to estimate its bad debts,what will be the net realizable value of its accounts receivable after the adjustment for bad debts expense?
A)$216,000
B)$219,000
C)$222,000
D)$250,000

Question

Mellon Corporation
The data presented below are for Mellon Corporation for the year ended December 31,2017:
??
 $\begin{array}{lr}
\text { Sales (100\% on credit) } & \$ 1,500,000 \
\text { Sales returns } & 60,000 \
\text { Accounts receivable (December 31, 2017) } & 250,000 \
\text { Allowance for doubtful accounts (credit balance) (before adjustment at December } & \
31,2017 & 3,000 \
\text { Estimated amount of uncoll ectible accounts based on an aging analysis } & 31,000
\end{array}$
-Refer to the information for Mellon Corporation. ?
If Mellon uses the aging of accounts receivable approach to estimate its bad debts,what will be the net realizable value of its accounts receivable after the adjustment for bad debts expense?
A)$216,000
B)$219,000
C)$222,000
D)$250,000

Quizplus · Accepted Answer

To calculate the net realizable value of accounts receivable, we need to deduct the estimated amount of bad debts. Using the aging of accounts receivable approach, we can estimate the amount of bad debts.

Age	Accounts Receivable	Estimated % Uncollectible	Estimated Bad Debts
0-30 days	$300,000	1%	$3,000
31-60 days	$150,000	3%	$4,500
61-90 days	$100,000	5%	$5,000
Over 90 days	$50,000	10%	$5,000

Total estimated bad debts = $17,500

Therefore, the net realizable value of accounts receivable after the adjustment for bad debts expense will be:

Accounts Receivable - Estimated Bad Debts = $236,500 - $17,500 = $219,000

Hence, the correct answer is option B) $219,000.

Mellon Corporation the Data Presented Below Are for Mellon Corporation

Mellon Corporation
the Data Presented Below Are for Mellon Corporation