Question

Using the following information Accounts receivable Allowance Cash realizable value Question 3.0 31 3 points Save Answer 12/31/15 $525,000 140.000) $185.000 During 2016, sales on account were $ 145,000 and collections on account were $100,000. Also during 2016, the company wrote off $5,000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that uncollectible accounts should be estimated at $45,000. The change in the cash realizable value from the balance at 12/31/15 to 12/31/16 was a A. $35.000 increase. B. $41,000 increase C. $30,000 increase D $45,000 increase

Answer 1

Answer:

Option A. $35,000 increase

Explanation:

Allowance = $40,000

Sales on account = $145,000

Collections = $100,000

Bad debts = $5,000

Uncollectible accounts = $45,000

Change in cash realizable value = Allowance + Sales on account - Collections - Bad debts - uncollectible accounts estimated

= $40,000 + $145,000 - $100,000 - $5000 - $45000

= $35,000