At the end of the current year, Accounts Receivable has a balance of $550,000; Allowance for Doubtful Accounts has a credit balance of $5,500; and net sales for the year total $2,500,000. An analysis of receivables estimates uncollectible receivables as $25,000. Determine the net realizable value of accounts receivable after adjustment. (Hint: Determine the amount of the adjusting entry for bad debt expense and the adjusted balance Allowance of Doubtful Accounts.)
A) $550,000
B) $544,500
C) $525,000
D) $575,000

Question

Quizplus · Accepted Answer

The net realizable value of accounts receivable is calculated as Accounts Receivable ($550,000) minus the adjusted balance of Allowance for Doubtful Accounts ($25,000), resulting in $525,000.

At the End of the Current Year, Accounts Receivable Has