Grayson Nursery sells trees and shrubbery. Although a majority of its sales are

Question

Grayson Nursery sells trees and shrubbery. Although a majority of its sales are for cash, it makes a significant amount of credit sales. During 2016, its first year of operations, Grayson experienced the following:

Assuming that Grayson uses the direct write off method of accounting for uncollectible accounts, what is the net realizable value of accounts receivable at December 31, 2016?

a. $700

b. $13,200

c.$11,800

d. $12,500

  Sales on account $160,000   Cash sales 340,000   Collection of accounts receivables 147,500   Uncollectible accounts charged off during the year 700

Explanation / Answer

Net realizable value of accounts receivable = 160000-147500-700= 11800 Option C is correct

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