On January 1, Year 2, Kincaid Company\'s Accounts Receivable and the Allowance f
ID: 2545785 • Letter: O
Question
On January 1, Year 2, Kincaid Company's Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $68,200 and $2,300, respectively. During the year Kincaid reported $176,000 of credit sales. Kincaid wrote off $1,550 of receivables as uncollectible in Year 2. Cash collections of receivables amounted to $203,300. Kincaid estimates that it will be unable to collect one percent (1%) of credit sales.
The net realizable value of receivables appearing on Kincaid's Year 2 balance sheet will amount to:
a. 36,840
b 40900
c. 37590
d. 39350
Explanation / Answer
Accounts receivable ending balance = 68200 + 176000 - 203300 = 40900
Allowance for bad debt account ending balance = 2300 + 176000 *1% = 4060
Net realizable value = 40900 - 4060 = 36840