Accounts Receivable Has a Balance of $30,000 and the Allowance

question 103

Multiple Choice

Accounts receivable has a balance of $30,000 and the Allowance for Bad Debts has a credit balance of $3,000. The allowance method is used. What is the net realizable value before and after a $2,000 Account Receivable is written off?

• A)$27,000; $27,000
• B)$14,300; $14,300
• C)$16,000; $15,940
• D)$16,000; $16,000

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Definitions:

Rate of Interest

The percentage of a sum of money charged for its use, typically expressed as an annual percentage.

Equity Financing

The method of raising capital through the sale of shares in a company, thereby granting shareholders ownership interests.

Five C's of Credit

are criteria that lenders use to evaluate the creditworthiness of a borrower: character, capacity, capital, collateral, and conditions.

Debt Financing

A method of raising capital through the borrowing of money, typically involving the issuance of bonds or taking out loans.