Before year-end adjusting entries, Dunn Company's account balances at December 31, 2010, for accounts receivable and the related allowance for uncollectible accounts were $600,000 and $45,000, respectively.

An aging of accounts receivable indicated that $62,500 of the December 31 receivables are expected to be uncollectible. The cash realizable value of accounts receivable after adjustment is:

a. $582,500. b. $537,500. c. $492,500. d. $555,000.

Question

Business

Colten

26 September, 21:14

Before year-end adjusting entries, Dunn Company's account balances at December 31, 2010, for accounts receivable and the related allowance for uncollectible accounts were $600,000 and $45,000, respectively.

An aging of accounts receivable indicated that $62,500 of the December 31 receivables are expected to be uncollectible. The cash realizable value of accounts receivable after adjustment is:

a. $582,500. b. $537,500. c. $492,500. d. $555,000.

+2

Answers (1)

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Ben Ewing · Answer 1

b. $537,500

Explanation:

The computation of the cash realizable value of accounts receivable is shown below:

= Ending balance of accounts receivable - aging of accounts receivable

= $600,000 - $62,500

= $537,500

We simply deduct the aging of accounts receivable from the ending balance of accounts receivable so that the accurate amount can come

All other information which is given is not relevant. Hence, ignored it