Using the following information: $$\begin{array} { l r }
&\underline { 12 / 31 / 15 } \
\text { Accounts receivable } & \$ 525,000 \
\text { Allowance } &\underline { ( 40,000 ) } \
\text { Cash realizable value } & \underline { \$ 485,000 }\
\end{array}$$

- During 2016 sales on account were $145000 and collections on account were $100000. Also during 2016 the company wrote off $5000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that uncollectible accounts should be estimated at $45000. The change in the cash realizable value from the balance at 12/31/15 to 12/31/16 was a
A) $35000 increase.
B) $41000 increase.
C) $30000 increase.
D) $45000 increase.

Question

Using the following information: $$\begin{array} { l r } 
&\underline { 12 / 31 / 15 } \
\text { Accounts receivable } &  \$ 525,000 \
\text { Allowance } &\underline { ( 40,000 ) } \
\text { Cash realizable value } & \underline { \$ 485,000 }\
\end{array}$$

- During 2016 sales on account were $145000 and collections on account were $100000. Also during 2016 the company wrote off $5000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that uncollectible accounts should be estimated at $45000. The change in the cash realizable value from the balance at 12/31/15 to 12/31/16 was a
A) $35000 increase.
B) $41000 increase.
C) $30000 increase.
D) $45000 increase.

Quizplus · Accepted Answer

The cash realizable value is the amount of accounts receivable that is expected to be collected. The change in the cash realizable value from the balance at 12/31/15 to 12/31/16 is $485,000 - $450,000 = $35,000.

Using the Following Information - During 2016 Sales on Account Were $145000 and Collections