The following information is related to December 31, 2013 balances. • Accounts r
ID: 2484101 • Letter: T
Question
The following information is related to December 31, 2013 balances.
•
Accounts receivable
$2,100,000
•
Allowance for doubtful accounts (credit)
(180,000)
•
Cash realizable value
$1,920,000
During 2014 sales on account were $580,000 and collections on account were $344,000. Also during 2014 the company wrote off $32,000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that bad debts should be estimated at $216,000. The change in the cash realizable value from the balance at 12/31/13 to 12/31/14 was a
$168,000 increase.
$204,000 increase.
$236,000 increase.
$200,000 increase.
•
Accounts receivable
$2,100,000
•
Allowance for doubtful accounts (credit)
(180,000)
•
Cash realizable value
$1,920,000
Explanation / Answer
The correct answer is $ 168,000 increase.
*Accounts receivable, December 31, 2014 = Beginning balance + Sales on account - Collections on account - Write-offs = $ 2,100,000 + $ 580,000 - $ 344,000 - $ 32,000 = $ 2,304,000
Change in cash realizable value = $ 2,088,000 - $ 1,920,000 = $ 168,000, increase
Accounts receivable, December 31, 2014 $2,304,000* Allowance for doubtful accounts (credit) $216,000 Cash realizable value $2,088,000Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.