Accounts Receivable Has a Balance of $5,000 and the Allowance

question 132

Multiple Choice

Accounts receivable has a balance of $5,000 and the Allowance for Bad Debts has a credit balance of $440. The allowance method is used. What is the net realizable value after a $160 account receivable is written off?

• A)$4,400
• B)$4,720
• C)$4,560
• D)$5,000

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Definitions:

Period Cost

Costs that are expensed in the period in which they are incurred, typically related to selling, general, and administrative activities rather than production.

Selling and Administrative Expense

The combined total of all expenses directly related to the selling of products and the administration of a business.

Direct Materials

Raw materials that can be directly traced to the production of a specific product and are an integral part of the finished product.

Transportation Out

Transportation out refers to the costs associated with delivering goods from a seller to a buyer, often recognized as a selling expense.