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the miller company earned $125,000 of revenue on account during year 1. there was no beginning balance in the accounts receivable and allowance accounts. during year 1, miller collected $83,000 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 amount of uncollectible accounts expense that will be recognized on the year 1 income statement?

Respuesta :

The amount of uncollectible accounts expense that will be recognized on the year 1 income statement will be $38,250.

A valuation method called net realizable value (NRV), which is popular in inventory accounting, takes into consideration the total amount of money an asset can bring in from sales less an estimate of the charges, fees, and taxes related to that sale or disposal.

The computation of the net realizable value is shown below:

= Earned revenue - cash collected amount - estimated value

where,

Earned revenue is $125,000

Cash collection is $83,000

And, the estimated value is

= $125,000 × 3%

= $3,750

So, placing these values to the above formula the net realizable value is

= $125,000 - $83,000 - $3,750

= $38,250

The amount of uncollectible accounts expense that will be recognized on the year 1 income statement will be $38,250.

To know more about net realizable value refer:

https://brainly.com/question/19341702

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