Question

A company VAMPIRE Inc. has the following information from its balance sheet:

Cash $70,000
Accounts receivable $50,000
Allowance for Doubtful Accounts $4,500
Inventory $125,000
Based on this information, the value of the accounts receivable is equal to:

Answer 1

The adjusted value of the accounts receivable for VAMPIRE Inc., after accounting for the Allowance for Doubtful Accounts, is $45,500. This figure represents the realistic amount the company expects to collect, factoring in potential bad debts.

Step-by-step explanation:

The question inquires about the value of the accounts receivable for a company named VAMPIRE Inc. based on given balance sheet information. The accounts receivable are shown as $50,000, but this does not factor in the Allowance for Doubtful Accounts, which is money set aside for potential future bad debts. To find the adjusted value of the accounts receivable, we subtract the Allowance for Doubtful Accounts from the accounts receivable.

Here is the calculation:

• Accounts Receivable: $50,000
• Less: Allowance for Doubtful Accounts: $4,500
• Adjusted Accounts Receivable: $45,500

This adjusted value reflects a more accurate measure of the cash the company can expect to receive from its accounts receivable after considering potential bad debts.