Bay Company Began Using the Allowance Method in 2014

Multiple Choice

Bay Company began using the allowance method in 2014. On January 1, 2014, Bay had a $3,000 balance in the Accounts Receivable account and a zero balance in the Allowance for Doubtful Accounts account. During 2014, Bay provided $25,000 of service on account. The company collected $21,000 cash from account receivable. Uncollectible accounts are estimated to be 2% of sales on account.
The net realizable value of Bay's accounts receivable as of December 31, 2014 was

A) $7,000.
B) $3,500.
C) $6,500.
D) $500.