Multiple Choice Question 134 The following information is related to December 31

Question

Multiple Choice Question 134 The following information is related to December 31, 2016 balances . Accounts receivable . Allowance for doubtful accounts (credit) . Cash realizable value $3490000 (254000) $2810000 During 2017 sales on account were $885000 and collections on account were $500000. Also during 2017 the company wrote off $49000 in uncollectible accounts. An analysis of outstanding receival ccounts at year end indicated that bad debts should be estimated at $323000. The change in the cash realizable value from the balance at 12/31/16 to 12/31/17 was a $693000 increase. $74200o in O of 1 used SAVE FOR LATER

Explanation / Answer

Computation of Change in Cash Realizable Vlue Opening Account Receivable $3,490,000 Add Sales During 2017 $885,000 Less Collection during 2017 -$500,000 less Bad Debts -$49,000 Account receivable at the end $3,826,000 Less Allowance for bad Debt -$323,000 Cash Realizble Value $3,503,000 Less Opening Balance of Cash Realizable Value -$2,810,000 Increase in Cash Realizable Value $693,000 Hence Increase in cash Realizable value by $693000

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