On January 1, Year 2, Kincaid Company\'s Accounts Receivable and the Allowance f
ID: 2571050 • Letter: O
Question
On January 1, Year 2, Kincaid Company's Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $71,000 and $2,900, respectively. During the year Kincaid reported $190,000 of credit sales. Kincaid wrote off $1,750 of receivables as uncollectible in Year 2. Cash collections of receivables amounted to $227,700. 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:
Multiple Choice
$29,650.
$28,500.
$33,300.
$31,550.
Explanation / Answer
Accounts receivable ending balance =71000+190000-1750-227700= 31550 Allowance for Doubtful Accounts ending balance = 2900-1750+(190000*1%)= 3050 Net realizable value of receivables = 31550-3050= 28500 Option 2 is correct