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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Prior to adjustments, Barrett Company’s account balances at December 31, 2019, for Accounts Receivable and the related Allowance for Doubtful Accounts were $1,200,000 and $60,000, respectively. An aging of accounts receivable indicated that $106,000 of the December 31, 2019, receivables may be uncollectible. The net realizable value of accounts receivable at December 31, 2019, was:

  1. a. $1,034,000
  2. b. $1,094,000
  3. c. $1,140,000
  4. d. $1,154,000

To determine

Identify the net realizable value of accounts receivable as on December 2019.

Explanation

Net accounts receivable:

Net accounts receivable represents net realizable value of accounts receivable. It is accounts receivable less allowance for doubtful accounts.

Justification for the incorrect options of a, c and d:

$1, 034, 000, $1,140,000 and $1,154,000 are not the amounts of net realizable value of accounts receivable at December 31.

Justification for the correct option of b:

Calculate the net realizable value of accounts receivable:

Netrealizablevalue=(

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