On January 1,2017,Accounts Receivable and Allowance for Uncollectible Accounts for Darius Company carried balances of $20,000 and $550,respectively.During the year,the company reported $70,000 of credit sales.There were $400 of receivables written off as uncollectible in 2017.Cash collections of receivables amounted to $74,700.The company estimates that it will be unable to collect 5% of the year-end accounts receivable balance.
The net realizable value of receivables appearing on the 2017 balance sheet will amount to
A)$14,105.
B)$14,155.
C)$14,900.
D)$15,450.

Question

On January 1,2017,Accounts Receivable and Allowance for Uncollectible Accounts for Darius Company carried balances of $20,000 and $550,respectively.During the year,the company reported $70,000 of credit sales.There were $400 of receivables written off as uncollectible in 2017.Cash collections of receivables amounted to $74,700.The company estimates that it will be unable to collect 5% of the year-end accounts receivable balance. ​
The net realizable value of receivables appearing on the 2017 balance sheet will amount to
A)$14,105.
B)$14,155.
C)$14,900.
D)$15,450.

Quizplus · Accepted Answer

First, we need to calculate the ending balance of Accounts Receivable by adding the credit sales and deducting the write-off amount:

Beginning balance: $20,000 
+ Credit sales: $70,000 
- Write-off: $400 
= Ending balance: $89,600

Next, we need to calculate the amount of Allowance for Uncollectible Accounts needed by multiplying the ending balance of accounts receivable by the estimated uncollectible percentage:

Ending balance of accounts receivable: $89,600 
x Estimated uncollectible percentage: 5% 
= Required Allowance: $4,480

Now, we can calculate the net realizable value of accounts receivable by deducting the required allowance from the ending balance of accounts receivable:

Ending balance of accounts receivable: $89,600 
- Required allowance: $4,480 
= Net realizable value: $85,120

Therefore, the correct answer is B) $14,155.