Bay Company began using the allowance method in 2014. On January 1, 2014, Bay had a $3,000 balance in the accounts receivables account and a zero balance in the allowance for doubtful accounts account. During 2014, Bay provided $25,000 of service on account. The company collected $21,000 cash from accounts receivable. Uncollectible accounts are estimated to be 2% of sales on account. The net realizable value of Bay's accounts receivable as of December 31, 2014, was: A. $7,000 B. $3,500 C. $6,500 D. $500
Bay Company began using the allowance method in 2014. On January 1, 2014, Bay had a $3,000 balance in the accounts receivables account and a zero balance in the allowance for doubtful accounts account. During 2014, Bay provided $25,000 of service on account. The company collected $21,000 cash from accounts receivable. Uncollectible accounts are estimated to be 2% of sales on account. The net realizable value of Bay's accounts receivable as of December 31, 2014, was: A. $7,000 B. $3,500 C. $6,500 D. $500
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter16: Accounting For Accounts Receivable
Section: Chapter Questions
Problem 1CE
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Transcribed Image Text:Bay Company began using the allowance method in 2014. On January 1,
2014, Bay had a $3,000 balance in the accounts receivables account and
a zero balance in the allowance for doubtful accounts account. During
2014, Bay provided $25,000 of service on account. The company
collected $21,000 cash from accounts receivable. Uncollectible accounts
are estimated to be 2% of sales on account.
The net realizable value of Bay's accounts receivable as of December 31,
2014, was:
A. $7,000
B. $3,500
C. $6,500
D. $500
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