The following information was presented in the balance sheet of Gloria Company as of December 31,2014: Which one of the following statements is true?

Question

The following information was presented in the balance sheet of Gloria Company as of December 31,2014:  Which one of the following statements is true?

Quizplus · Accepted Answer

The net realizable value of accounts receivable is the amount that the company actually expects to collect from its customers. In this case, the gross amount of accounts receivable is $1,700,000, but $100,000 is estimated to be uncollectible, resulting in a net realizable value of $1,600,000. Therefore, option C is correct. Option A is incorrect because it refers to the gross amount of accounts receivable, not the net realizable value. Option B is incorrect because it assumes that the balance in the accounts receivable account equals the net realizable value. Option D is incorrect because it is lower than the company's estimate of net realizable value.

The Following Information Was Presented in the Balance Sheet of Gloria