Net realizable value of receivables is gross receivables minus:

a. bad expense and sales returns

b. bad debt expense and estimated returns and allowances

c. estimated uncollectibles, and estimated returns and allowances

d. proven uncollectibles and estimated returns and allowances

Questions 2 and 3 reference the following unadjusted year end trial balance information available for Edsel Company's 2014 finances:

Cash sales $400,000

Credit sales 600,000

Ending account receivable balance 180,000

Ending allowance for uncollectibles 1,500

Estimated uncollectibles 2%

2. If Edsel uses the sales revenue approach for estimating bad debt expense, the income statement should show an expense of:

a. $10,000

b. $12,000

c. $14,000

d. $20,000

3. If Edsel uses the gross accounts receivable approach for estimating bad debt expense, the allowance for uncollectibles account after the proper adjustments to the accounts are recorded, should show a balance of:

a. a contra-asset account

b. a contra-revenue account

c. on the balance sheet

d. on the statement of shareholders' equity