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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