Ellis Company started the year with a $4,600 balance in accounts receivable and a $150 balance in the allowance for doubtful accounts. The company had credit sales of $12,000, collections on accounts receivable of $13,000, and wrote off uncollectible accounts of $200 during the year. The company believes that 2 percent of its credit sales will be uncollectible.

The net realizable value of receivables at the end of the year would be

Question 4 options:

A)

$3,210.

B)

$3,350.

C)

$3,250.

The company believes that 2 percent of its credit sales will be uncollectible.

The net realizable value of receivables at the end of the year would be:

C)

$3,110.

Explanation:

There is one option missing:

Balances

Dr Accounts receivable $ 3,400

Dr Allowance for Uncollectible Accounts $ 50

The company believes that 2 percent of its credit sales will be uncollectible.

Dr Bad Debt Expense $ 290

Cr Allowance for Uncollectible Accounts $ 290

The net realizable value of receivables at the end of the year would be

$ 3,110

Ellis Company started the year with a $4,600 balance in accounts receivable and a $150 balance in the allowance for doubtful accounts.

Dr Accounts receivable $ 4,600

Cr Allowance for Uncollectible Accounts $ 150

The company had credit sales of $12,000

Dr Accounts receivable $ 12,000

Cr Sales $ 12,000

Collections on accounts receivable of $13,000,

Dr CASH $ 13,000

Cr Accounts receivable $ 13,000

Wrote off uncollectible accounts of $200 during the year

Dr Allowance for Uncollectible Accounts $ 200

Cr Accounts receivable $ 200