During the Year, Liptom Company Made an Entry to Write

question 25

Multiple Choice

During the year, Liptom Company made an entry to write off a $4,000 uncollectible account. Before this entry was made, the balance in accounts receivable was $60,000 and the balance in the allowance account was $4,500 (normal balance) . What is the net realizable value of accounts receivable after the write-off entry?

• A) $60,000
• B) $64,500
• C) $55,500
• D) $51,500

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Definitions:

Financial Risks

The risk of experiencing financial loss from an investment or entrepreneurial activity.

Financial Leverage

The use of borrowed funds to increase the potential return of an investment, which also increases the risk of loss.

Sensitivity of EPS

The degree to which a company's earnings per share (EPS) is affected by fluctuations in its operating income.

ROE

A measure of a corporation's profitability that reveals how much profit a company generates with the money shareholders have invested.