Answer:
The change in the cash realizable value from the balance 12/31/17 to 12/31/18 was $37,840 increase.
Explanation:
Cash realizable value of accounts receivable is simply the amount that is deemed recoverable after factoring the portion that is uncollectible.
The effects of the transactions during the year are as follows:
Sales on account:
Debit Accounts receivable $145,400
Credit Sales revenue $145,400
<em>(To recognize the sales on account)</em>
Collections on account:
Debit Cash $100,000
Credit Accounts receivable $100,000
<em>(To recognize collections on account)</em>
Write-off:
Debit Allowance for doubtful accounts $3,960
Credit Accounts receivable $3,960
<em>(To recognize write-off of outstanding accounts receivable)</em>
Therefore, the effects of the foregoing journals on Accounts receivable are: $526,000 + $145,400 - $100,000 - $3,960 = $567,440.
As at 12/31/18, cash realizable value would be $567,440 - $39,300 = $528,140. The change in the cash realizable value from the balance at 12/31/17 to 12/31/18 was therefore $528,140 - $490,300 = $37,840 (increase).
