An Analysis and Aging of the Accounts Receivable of Watts

question 243

Multiple Choice

An analysis and aging of the accounts receivable of Watts Company at December 31 reveal these data: $\begin{array}{lr}\text { Accounts receivable } & \$ 2,400,000 \\\text { Allowance for doubtful accounts per books before adjustment (credit) } & 150,000 \\\text { Amounts expected to become uncollectible } & 195,000\end{array}$ What is the cash realizable value of the accounts receivable at December 31 after adjustment?

• A) $2,055,000
• B) $2,250,000
• C) $2,400,000
• D) $2,205,000

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Definitions:

Social Security Tax

A tax levied on both employers and employees to fund the Social Security program, which provides retirement, disability, and survivors' benefits.

Labor

The human effort, both physical and mental, used in the production of goods and services, considered one of the main factors of production.

Deadweight Loss

A loss in total societal welfare that occurs when market equilibrium is not achieved or when market imperfections exist, leading to inefficient allocation of resources.

Relatively Inelastic

Describes a situation where the demand for a good or service changes by a smaller percentage than changes in its price.