Answer:
$27,725
Explanation:
Given that,
kincaid company's accounts receivable = $31,000
Allowance for doubtful accounts at January 1 = $500
Wrote off receivables as uncollectible = $550
1% of credit sales
cash collections of receivables = $74,550
Accounts receivable:
= Accounts receivable at January 1 + Credit sales - Wrote off receivables as uncollectible - Cash collection of receivables
= $31,000 + $72,500 - $550 - $74,550
= $28,400
Accounts for Doubtful Accounts:
= Allowance for doubtful accounts at January 1 - Wrote off receivables as uncollectible + 1% of credit sales
= $500 - $550 + (0.01 × $72500)
= $500 - $550 + $725
= $675
Net realizable value of receivables:
= Accounts receivable - Accounts for Doubtful Accounts
= $28,400 - $675
= $27,725
Therefore, the net realizable value of receivables appearing on kincaid's year 2 balance sheet will amount to $27,725.
