Answer:
c. $ 84,000 increase
Explanation:
The entry when the company wrote off uncollectible accounts:
Debit Allowance for Doubtful Accounts $16,000
Credit Uncollectible accounts $16,000
It makes Account receivable decrease: $16,000
In 2007, Sales on account that were not collected = $290,000 - $172,000 = $118,000
It makes Account receivable at the end of the year increase: $118,000
At 12/31/07,
1. Accounts receivable was: $1,050,000+$118,000-$16,000=$1,152,000
2. Cash realizable value = Accounts receivable - Allowance for Doubtful Accounts = $1,152,000 - $108,000 = $1,044,000
From 12/31/06 to 12/31/07, cash realizable value from the balance increase:
$1,044,000 - $960,000 = $84,000
