Boulder Company had a $75,000 beginning balance in Accounts Receivable and a $3,

Question

Boulder Company had a $75,000 beginning balance in Accounts Receivable and a $3,000 credit balance in the Allowance for Uncollectible Accounts. During the year, credit sales were $300,000 and customers' accounts collected were $295,000. Also, $2,000 in worthless accounts were written off. What was the net amount of receivables included in the current assets at the end of the year, before any provision was made for uncollectible accounts?

Select one:

A. $65,000

B. $63,000

C. $77,000

D. $60,000

E. None of the above

Explanation / Answer

Answer is C - $77,000

Calculation

Note: In order to write-off the worthless receivables accounts of $2,000, Allowance for Uncollectible Accounts will be debited with $2,000 and accounts receivables account will be credited with $2,000. Therefore after write-off the worthless accounts, remaining balance in the Allowance for Uncollectible Accounts is $1,000 ($3,000 - $2,000).

Description Amount Beginning balance in Accounts Receivable $75,000 Add: Credit sales made during the year $300,000 Less: Amount collected from customers (295,000) Less: Accounts receivables written off ($2,000) $78,000 Less: Be balance in the Allowance for Uncollectible Accounts ($1,000) Net amount of receivables included in the current assets at the end of the year before any provision was made for uncollectible accounts $77,000

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