Question

In its first year of operations, Cloudbox has credit sales of $200,000. Its year-end balance in accounts receivable is $10,000, and the company estimates that $1,500 of its accounts receivable is uncollectible. What is the net realizable value of accounts receivable?

a) $188,500
b) $198,500
c) $198,000
d) $201,500

Answer 1

To calculate the net realizable value of accounts receivable, subtract the estimated uncollectible amount from the year-end balance in accounts receivable.

Step-by-step explanation:

To calculate the net realizable value of accounts receivable, we need to subtract the estimated uncollectible amount from the year-end balance in accounts receivable.

Net realizable value = Balance in accounts receivable - Estimated uncollectible amount

Net realizable value = $10,000 - $1,500 = $8,500

Therefore, the net realizable value of accounts receivable is $8,500.