At the End of the Current Year, Accounts Receivable Has

question 75

Multiple Choice

At the end of the current year, Accounts Receivable has a balance of $550,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and net sales for the year total $2,500,000. An analysis of receivables estimates uncollectible receivables as $25,000. Determine the net realizable value of accounts receivable after adjustment. (Hint: Determine the amount of the adjusting entry for bad debt expense and the adjusted balance Allowance of Doubtful Accounts.)

• A) $550,000
• B) $544,500
• C) $525,000
• D) $575,000

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Definitions:

Accounts Payable

Liabilities of a business that are due to be paid to creditors within a short period of time, typically less than one year.

General Journal

A comprehensive accounting ledger that records all types of financial transactions before they are posted to more specific accounts.

General Journal

A primary accounting record used to record all types of transactions in chronological order before they are posted to individual accounts.

Unearned Items

Revenues received by a company for which the goods or services have not yet been provided or completed.