the miller company earned $127,000 of revenue on account during year 1. there was no beginning balance in…

the miller company earned $127,000 of revenue on account during year 1. there was no beginning balance in the accounts receivable and allowance accounts. during year 1, miller collected $84,000 of cash from its receivables accounts. the company estimates that it will be unable to collect 3% of its sales on account.\nwhat is the net realizable value of millers receivables at the end of year 1?\nmultiple choice\na. $39190\nb. $46,810\nc. $40,480\nd. $43,000

the miller company earned $127,000 of revenue on account during year 1. there was no beginning balance in the accounts receivable and allowance accounts. during year 1, miller collected $84,000 of cash from its receivables accounts. the company estimates that it will be unable to collect 3% of its sales on account.\nwhat is the net realizable value of millers receivables at the end of year 1?\nmultiple choice\na. $39190\nb. $46,810\nc. $40,480\nd. $43,000

Answer

Answer:

C. $$40,480$

Explanation:

Step1: Calculate ending accounts receivable

Ending AR = Revenue on account - Cash collected $= 127000 - 84000=$43000$

Step2: Calculate allowance for doubtful accounts

Allowance = Revenue on account $\times$ Estimated un - collectible percentage $=127000\times 3%=$3810$

Step3: Calculate net realizable value

Net realizable value = Ending accounts receivable - Allowance for doubtful accounts $=43000 - 3810=$40480$