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3 March, 13:33

Willis Company had $200,000 in credit sales for 2016, and it estimated that 2% of the credit sales would not be collected. The balance in Accounts Receivable at the end of the year was $38,000. Willis had never used the allowance method to account for its receivables till 2016. The net realizable value of its accounts receivable at the end of the year was $34,000. True False

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  1. 3 March, 13:39
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    True

    Explanation:

    It's True because you have to deduct from the total Accounts Receivable the balance in the Cr Allowance for Uncollectible Accounts estimated.

    The company estimate that 2% of the total Credit Sales will be uncollectible, which is, $4,000, if we deduct this value of the balance of accounts receivable of $38,000, we have a Net Realizable Value of Accounts Receivable of $34,000

    Credit Sales $ 200,000

    Cr Allowance for Uncollectible Accounts $ 4,000

    Dr Accounts receivable $ 38,000

    Net Realizable Value of Accounts receivable $ 34,000
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