Question

The Miller Company earned $190,000 of revenue on account during Year 1. There was no beginning...

The Miller Company earned $190,000 of revenue on account during Year 1. There was no beginning balance in the accounts receivable and allowance accounts. During Year 1, Miller collected $136,000 of cash from its receivables accounts. The company estimates that it will be unable to collect 3% of its sales on account.


What is the net realizable value of Miller's receivables at the end of Year 1?

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Answer #1

Sales Revenue

$ 190,000.00

Less: Cash collected

$ 136,000.00

Less: Uncollectable amount ($190000 X 3%)

$      5,700.00

Net Realizable value

$    48,300.00

Question states that uncollectable amount is 3% of sales on account so total sales on account is $190000 and uncollectable amount will be calculated on $190000.

Answer- net realizable value of Miller's receivables at the end of Year 1=$ 48,300

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