Question

Hancock Medical Supply Co., which had no beginning balance in its Accounts Receivable and Allowance for Doubtful Accounts, earned $88,500 of revenue on account during 2016. During 2016, Hancock collected $70,000 of cash from its receivables accounts. The company estimates that it will be unable to collect 1% of revenue on account. The amount of net realizable value of receivables on the December 31, 2016 balance sheet would be:

Answer 1

$17,615

Step-by-step explanation:

Hancock Medical Supply Co net realizable value of receivables on the December 31, 2016 balance sheet

Beginning accounts receivable $0

Add revenue on account $88,500

Less collected cash $70,000

Ending account receivable $18,500

Beginning allowance balance $0

Add uncollectible account expenses

($88,500×1%) $885

Ending Allowance balance $885

Net Realizable value of Receivables =

$18,500-$885

=$17,615

Therefore Hancock Medical Supply Co net realizable value of receivables on the December 31, 2016 balance sheet will be $17,615