On Janvuary 1, Year 2, Kincaid Company\'s Accourns Receivable and the Allowance
ID: 2545625 • Letter: O
Question
On Janvuary 1, Year 2, Kincaid Company's Accourns Receivable and the Allowance for Doubtfiul Accounts carried balances of $73,800 and $3.500 respectively. During the year Kincaid reported $204,000 of credit sales. Kincaid wrote off $t,950 of reoeivables as uncollectble in Yeer 2 Cash colections of receivables amounted to $252,100. Kincaid estimates that it will be unabe to collect one percent (1%) of credit sales. The net realizable value of receivables appearing on Kincaids Year 2 balance sheet will amount tor Mubpie Chace 25700 $20x0Explanation / Answer
Correct answer is D
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Ending balance in A/R account = 73800 + 204000 – 1950 – 252100
= 23750
Ending balance in Allowance for doubtful debt = 3500 – 1950 + (204000* 1%)
= 1550 + 2040
= 3590
Net realizable value of receivables = 23750 – 3590
= 20160
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