Final answer:
The cash realizable value of Hugh Company's accounts receivable after adjustment is $744,000. This is computed by deducting the updated allowance for doubtful accounts from the total accounts receivable, resulting in a reduced collectible amount that reflects expected uncollectibles.
Step-by-step explanation:
The cash realizable value of Hugh Company's accounts receivable after adjustment is $744,000.
To determine this value, we first note the total Accounts Receivable which is $800,000. We are given that the Allowance for Doubtful Accounts before adjustment is $50,000 (credit balance). After the analysis, the company expects $56,000 to become uncollectible. To find the adjusted cash realizable value, we subtract the updated uncollectible amount from the total Accounts Receivable: $800,000 - $56,000 = $744,000. This calculation takes into account the amount the company expects it will not be able to collect, providing a more accurate reflection of the cash they expect to realize from their receivables.
The initial Allowance for Doubtful Accounts is a credit balance and is thus considered when determining how much to adjust for the increase in estimated uncollectibles. The difference to be added to the allowance account is $56,000 - $50,000 = $6,000. The updated allowance for doubtful accounts (after adjustment) would be $50,000 + $6,000 = $56,000, which aligns with the estimated uncollectible amount. Hence, the correct adjusted cash realizable value after the adjustment is $744,000, option D.