Question

Hailey medical co., which had no beginning balance in its accounts receivable and allowance for doubtful accounts, earned $82,500 of revenue on account during 2011. During 2011, hailey collected $64,500 of cash from its receivable account. the company estimates that it will be unable to collect 6% of revenue on account. The amount of net realizable value of receivable on the december 31, 2011 balance sheet would be:

a) $17,205
b) $76,980
c) $63,270
d) $77,700

Answer 1

The net realizable value of the accounts receivable on the December 31, 2011 balance sheet would be $59,550.

Step-by-step explanation:

To calculate the net realizable value of accounts receivable, we need to determine the allowance for doubtful accounts. In this case, Hailey Medical Co. estimates that it will be unable to collect 6% of revenue on account, which amounts to $4,950 ($82,500 * 6%). Therefore, the net realizable value of accounts receivable on the December 31, 2011 balance sheet would be $59,550 ($64,500 - $4,950).