Guthrie Corporation Reports Accounts Receivable at a Net Realizable Value $\quad$

question 14

Multiple Choice

Guthrie Corporation reports accounts receivable at a net realizable value of $2,940,000 (gross receivable of $3,000,000 minus allowance for uncollectible accounts of $60,000) .Assume that there is an active market for these types of receivables and that the price is 94% of face value.To adjust the receivable's carrying value to fair value Guthrie would make which of the following entries?

• A) DR Realized loss on receivables\(\quad\)180,000
• CR Accounts receivable\(\quad\)180,000
• B) DR Unrealized loss on receivables\(\quad\)120,000
• CR Fair value adjustment-accounts receivable\(\quad\)120,000
• C) DR Unrealized loss on receivables\(\quad\)180,000
• CR Fair value adjustment-accounts receivable\(\quad\)180,000
• D) DR Realized loss on receivables\(\quad\)120,000
• CR Accounts receivable\(\quad\)120,000

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Definitions:

Innermost Layer

The deepest or most central layer within a structure.

Outermost Layer

The external surface or layer of an object or organism, often serving as a protective barrier.

Internal Jugular Veins

Large veins located in the neck that carry blood from the head back to the heart.

Subclavian Veins

Major veins located under the clavicle (collarbone) responsible for draining blood from the upper extremities back to the heart.