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The Miller Company earned $190,000 of revenue on account during Year 1. There was no beginning balance in the accounts receivable and allowance accounts. During Year 1, Miller collected $136,000 of cash from its receivables accounts. The company estimates that it will be unable to collect 3% of its sales on account.

-What is the net realizable value of Miller's receivables at the end of Year 1?
A)$54,000
B)$49,920
C)$59,700
D)$48,300

Question

[The following information applies to the questions displayed below.]

The Miller Company earned $190,000 of revenue on account during Year 1. There was no beginning balance in the accounts receivable and allowance accounts. During Year 1, Miller collected $136,000 of cash from its receivables accounts. The company estimates that it will be unable to collect 3% of its sales on account.

-What is the net realizable value of Miller's receivables at the end of Year 1?
A)$54,000
B)$49,920
C)$59,700
D)$48,300

Quizplus · Accepted Answer

Ending accounts receivable = Beginning accounts receivable of $0 + Revenue on account of $190,000 - Collections on account of $136,000 = $54,000
Ending allowance for doubtful accounts = Beginning allowance for doubtful accounts of $0 + Uncollectible accounts expense of $5,700 - Write-offs of $0 = $5,700
Net realizable value = Accounts receivable of $54,000 - Allowance for doubtful accounts of $5,700 = $48,300

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