Question

Hancock Medical Supply Company, which had no beginning balance in its Accounts Receivable and Allowance for Doubtful Accounts, recognized $160,000 of service revenue on account during Year 1. During Year 1, Hancock collected $128,000 of cash from accounts receivable. 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, Year 1 balance sheet would be:

Answer 1

Answer: amount of Net Realizable Value of receivables on the December 31, of Year 1=$ 30,400.

Step-by-step explanation:

Revenue during year 1= $ 160,000

Less:

1% uncollectible Revenue= $ 160,000 - 1% x $160,000=$160,000 -$1,600 = $158,400

Amount collected from Customers = $128,000

Accounts Receivable at the end of year = $ 158,400 - $ 128,000 = $ 30,400