Table 9-5
the Ritchie Company Gathered the Following Information Pertaining

question 101

Multiple Choice

Table 9-5
The Ritchie Company gathered the following information pertaining to its year ended December 31, 2019, prior to any adjustments:
$$\begin{array} { | l | r | r | } \hline \text { Net credit sales for the year } & \$ 780,000 & \\\hline \text { Accounts receivable, Dec. } 31,2019 & 170,000 & \\\hline \text { Allowance for doubtful accounts, } & & \\\text { December } 31,2019 & 3,200 & \mathrm { Cr } . \\\hline & & \\\hline\end{array}$$ Aging of accounts receivable at December 31, 2019:
$$\begin{array} { | l | r | } \hline 1 - 30 \text { days } & \$ 95,000 \\\hline 31 - 60 \text { days } & 38,000 \\\hline 61 - 90 \text { days } & 23,000 \\\hline \text { Over } 90 \text { days } & 14,000 \\\hline \text { Total } & \$ 170,000 \\\hline\end{array}$$
-Refer to Table 9-5. Assume Ritchie uses the aging-of-accounts-receivable method for estimating uncollectible accounts. Ritchie estimates that bad-debt expense will be aged as follows: 2.5% for 1-30 days; 4.5% for 31-60 days; 7.5% for 61-90 days; and 22.5% for over 90 days. After the adjustment for uncollectible accounts is made, the net realizable value of the accounts receivable will be:

• A)$157,840.
• B)$161,040.
• C)$170,000.
• D)$164,240.

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Definitions:

Firm's Beta

A measurement of a company's stock market risk compared to the market as a whole; it quantifies the volatility or systemic risk of a firm's shares.

Industry Group

A classification of companies that conduct business activities in the same sector or segment of the economy.

Index Model

A statistical model used to predict the returns of assets based on the returns of a benchmark market index and the assets' sensitivities to that index.

Covariances

A measure of how two stocks move together, indicating the degree to which their returns are interdependent.