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22 May, 14:21

Ellis Company started the year with a $4,600 balance in accounts receivable and a $150 balance in the allowance for doubtful accounts. The company had credit sales of $12,000, collections on accounts receivable of $13,000, and wrote off uncollectible accounts of $200 during the year. The company believes that 2 percent of its credit sales will be uncollectible.

The net realizable value of receivables at the end of the year would be

Question 4 options:

A)

$3,210.

B)

$3,350.

C)

$3,250.

+3
Answers (1)
  1. 22 May, 14:48
    0
    The company believes that 2 percent of its credit sales will be uncollectible.

    The net realizable value of receivables at the end of the year would be:

    C)

    $3,110.

    Explanation:

    There is one option missing:

    Balances

    Dr Accounts receivable $ 3,400

    Dr Allowance for Uncollectible Accounts $ 50

    The company believes that 2 percent of its credit sales will be uncollectible.

    Dr Bad Debt Expense $ 290

    Cr Allowance for Uncollectible Accounts $ 290

    The net realizable value of receivables at the end of the year would be

    $ 3,110

    Ellis Company started the year with a $4,600 balance in accounts receivable and a $150 balance in the allowance for doubtful accounts.

    Dr Accounts receivable $ 4,600

    Cr Allowance for Uncollectible Accounts $ 150

    The company had credit sales of $12,000

    Dr Accounts receivable $ 12,000

    Cr Sales $ 12,000

    Collections on accounts receivable of $13,000,

    Dr CASH $ 13,000

    Cr Accounts receivable $ 13,000

    Wrote off uncollectible accounts of $200 during the year

    Dr Allowance for Uncollectible Accounts $ 200

    Cr Accounts receivable $ 200
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