The following information is related to December 31, 2016 balances. • Accounts r
ID: 2554778 • Letter: T
Question
The following information is related to December 31, 2016 balances.
•
Accounts receivable
$3150000
•
Allowance for doubtful accounts (credit)
(270000)
•
Cash realizable value
$2880000
During 2017 sales on account were $870000 and collections on account were $516000. Also during 2017 the company wrote off $48000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that bad debts should be estimated at $324000. The change in the cash realizable value from the balance at 12/31/16 to 12/31/17 was a
$252000 increase.
$354000 increase.
$306000 increase.
$300000 increase.
•
Accounts receivable
$3150000
•
Allowance for doubtful accounts (credit)
(270000)
•
Cash realizable value
$2880000
Explanation / Answer
A. $252,000 increase
The change in the cash realizable value from the balance at 12/31/16 to 12/31/17 was a:
= $3,150,000 + $870,000 - $516,000 - $48,000 - $324,000 - $2,880,000
= $252,000 increase
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