Question

Brickman Company uses the allowance method to account for uncollectible receivables. At the beginning of the year, Allowance for Bad Debts had a credit balance of $1,000. During the year Brickman wrote off uncollectible receivables of $ 2,100. Brickman recorded Bad Debts Expense of $2,700. Brickman's year-end balance in Allowance for Bad Debts is $1,600. Brickman's ending balance of Accounts Receivable is $19,500. Compute the net realizable value of Accounts Receivable at year-end.

A: $16,800
B: $19,500
C: $17,400
D: $17,900`

Answer 1

Option (D), The net realizable value of Brickman Company's Accounts Receivable at year-end is calculated by subtracting the year-end balance in the Allowance for Bad Debts from the ending balance of Accounts Receivable which equals $17,900.

Step-by-step explanation:

To compute the net realizable value of Accounts Receivable at year-end for Brickman Company, we need to deduct the year-end balance in Allowance for Bad Debts from the ending balance of Accounts Receivable.

Here's the calculation:

Ending balance of Accounts Receivable: $19,500
Less: Allowance for Bad Debts: $1,600

Net realizable value of Accounts Receivable: $19,500 - $1,600 = $17,900

Therefore, the correct answer is D: $17,900.