The Following Comparative Financial Statements for the Years Ended December

question 62

Essay

The following comparative financial statements for the years ended December 31,Year 2 and Year 1 are provided for Air Plus Company:
$\begin{array} { l r r } \text { Balance Sheet: } & \text { Year 2 } & \text { Year 1 } \\\quad \text { Cash and cash equivalents } & \$ 87,000 & \$ 71,600 \\\text { Accounts receivables, less allowance for doubtful } & & \\\quad \text { accounts of \$90 (Year 2) and \$82 (Year 1) } & 3,800 & 2,500 \\\text { Notes receivable } & 15,000 & 20,000 \\& & \\\text { Income Statement: } \\ \quad \text { Net sales for the year } & \$ 9,700 & \$ 8,800 \\\text { Net income for the year } & 920 & 1,050\end{array}$

Answer these questions concerning the company's receivables:
A) What is the gross amount of accounts receivable at December 31, Year 2? Why is this amount different from the amount of receivables shown in the Year 2 column of the balance sheet?

B) What is the net realizable value of accounts receivable at December 31, Year 2? What does this amount represent?

C) How should accounts receivable be classified on a classified balance sheet? Why?

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Definitions:

Dependent Variable

The variable being tested and measured in an experiment, which is expected to change as a result of manipulations of the independent variable.

Industrial Designer

A professional who develops concepts and designs for manufactured products, focusing on aesthetics, functionality, and usability.

Errors

Mistakes or inaccuracies in judgment, action, or calculation.

Experimental Group

In scientific research, the group of subjects who receive the treatment or condition that is being tested.