Bay Company Began Using the Allowance Method in 2014

question 95

Multiple Choice

Bay Company began using the allowance method in 2014. On January 1, 2014, Bay had a $3,000 balance in the Accounts Receivable account and a zero balance in the Allowance for Doubtful Accounts account. During 2014, Bay provided $25,000 of service on account. The company collected $21,000 cash from account receivable. Uncollectible accounts are estimated to be 2% of sales on account.
The net realizable value of Bay's accounts receivable as of December 31, 2014 was

• A) $7,000.
• B) $3,500.
• C) $6,500.
• D) $500.

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Definitions:

Potential Buyers

Individuals or entities that show interest in purchasing a product or service but have not yet made the decision to buy.

Relative Measure

A comparative metric that evaluates a data point or performance outcome in relation to another baseline or standard.

Emission Output

The total quantity of pollutants released into the environment, often measured in the context of industrial operations or vehicle emissions.

Diesel Fuel

A type of fuel derived from petroleum used in diesel engines, known for its energy efficiency.