On January 1, 2016, Kincaid Company\'s Accounts Receivable and the Allowance for
ID: 2581905 • Letter: O
Question
On January 1, 2016, 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 2016. Cash collections of receivables amounted to $227,700. Kincaid estimates that it will be unable to collect one percent (1%) of credit sales.
1. The amount of uncollectible accounts expense recognized in the 2016 income statement will be:
A. $1,900
B. $710
C. $2,277
D. $1,750
2. The net realizable value of recievables appearing on Kincaid's 2016 balance sheet will amount to:
A. $29,650
B. $28,500
C. $33,300
D. $31,550
Explanation / Answer
1 Amount of uncollectible accounts expense = 190000*1% = 1900 2 Accounts Receivable ending balance =71000+190000-1750-227700= 31550 Allowance for Doubtful Accounts ending balance = 2900-1750+1900= 3050 Net realizable value of recievables = 31550-3050= 28500