The Miller Company recognized $129,000 of service revenue earned on account during Year 2. There was no beginning balance in the accounts receivable and allowance accounts. During Year 2, Miller collected $85,000 of cash from accounts receivable. The company estimates that it will be unable to collect 3% of its sales on account.

The net realizable value of Miller's receivables at the end of Year 2 was:

Multiple Choice

• $44,000.

• $41,450.

• $47,870.

• $40,130.