On January 1, Year 2, Kincaid Company's Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $68,200 and $2,300, respectively. During Year 2, Kincaid reported $176,000 of credit sales, wrote off $1,550 of receivables as uncollectible, and collected cash from receivables amounting to $203,300. Kincaid estimates that it will be unable to collect one percent (1%) of credit sales.

A.

What effect will the entry to recognize the uncollectible accounts expense for Year 2 have on the elements of the financial statements?

Multiple Choice

• Increase total assets and retained earnings.

• Decrease total assets and net income.

• Decrease total assets and increase retained earnings.

• Increase total assets and decrease net income.

B.

On January 1, Year 2, Kincaid Company's Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $68,200 and $2,300, respectively. During Year 2, Kincaid reported $176,000 of credit sales, wrote off $1,550 of receivables as uncollectible, and collected cash from receivables amounting to $203,300. Kincaid estimates that it will be unable to collect one percent (1%) of credit sales.

What is the net realizable value of receivables that will be reported on Kincaid's Year 2 balance sheet?

Multiple Choice

• $39,350

• $37,590

• $40,900

• $36,840

Thank you!