Question

The following balances were drawn from the accounts of Stripling Company as of December 31, Year 1.

Accounts Receivable $60,000
Allowance for Doubtful Accounts $9,000
During Year 2 Stripling earned $700,000 of revenue on account and collected $710,000 cash from accounts receivable. Also, the company wrote off $8,000 of accounts receivable that were classified as uncollectible during Year 2. If Stripling estimates uncollectible accounts expense to be 1% of revenue, the net realizable value of receivables as of December 31, Year 2 will be______.
a. $50,000.
b. $32,000.
c. $34,000.
d. $42,000.

Answer 1

b. $34,000

Step-by-step explanation:

Accounts Receivable

Opening 60,000 Cash 710,000

Sales 700,000 Write off 8,000

End bal. 42,000

Allowance for Uncollectible account

Wrote off 8,000 Opening 9,000

Bad debts 7,000

End bal. 8,000

Net realizable account = Accounts receivable - Allowance for bad debt

Net realizable account = $42,000 - $8,000

Net realizable account = $34,000