Question

Assume uncollectible accounts receivable are estimated at 5% of a $100,000 ending balance of accounts receivable and the allowance for uncollectible accounts receivable before any year-end adjustment amounted to a $1,500 debit balance. Given this information, determine the net realizable value of accounts receivable that should be reflected on the balance sheet at the end of the year.

Answer 1

The net realizable value of accounts receivable that should be reflected on the balance sheet at the end of the year is $98,500.

Step-by-step explanation:

To determine the net realizable value of accounts receivable that should be reflected on the balance sheet at the end of the year, we need to calculate the allowance for uncollectible accounts receivable. Given that uncollectible accounts are estimated at 5% of the $100,000 ending balance of accounts receivable, the estimated amount of uncollectible accounts is $5,000. The allowance for uncollectible accounts receivable before any year-end adjustment is a $1,500 debit balance. Therefore, the net realizable value of accounts receivable that should be reflected on the balance sheet is $98,500 ($100,000 - $5,000 - $1,500).