The following balances were drawn from the accounts of Stripling Company as of December 31, Year 1. Accounts Receivable $60,000
Allowance for Doubtful Accounts $9,000
During Year 2 Stripling earned $700,000 of revenue on account and collected $710,000 cash from accounts receivable. Also, the company wrote off $8,000 of accounts receivable that were classified as uncollectible during Year 2. If Stripling estimates uncollectible accounts expense to be 1% of revenue, the net realizable value of receivables as of December 31, Year 2 will be.
a. $50,000.
b. $32,000.
c. $34,000.
d. $42,000.

b. $34,000

Explanation:

             Accounts Receivable

Opening     60,000       Cash         710,000

Sales          700,000      Write off   8,000  

End bal.       42,000

Allowance for Uncollectible account

Wrote off       8,000     Opening    9,000  

                                     Bad debts  7,000

                                     End bal.     8,000

Net realizable account = Accounts receivable - Allowance for bad debt

Net realizable account = $42,000 - $8,000  

Net realizable account = $34,000

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