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:

Base Compensation

The initial salary or wage provided to an employee not including benefits, bonuses, or any form of variable compensation.

Fringe Benefits Programs

Employer-provided supplementary benefits that accompany direct wages or salaries, such as health insurance, retirement plans, and paid vacations.

Organization

A structured group of people working together to achieve a collective goal or purpose.

Performance Appraisal

A structured assessment of how well an employee performs their job and meets productivity goals against predefined standards and the goals of the organization.