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3 December, 13:46

On January 1, Year 1, the Accounts Receivable balance was $29,700 and the balance in the Allowance for Doubtful Accounts was $3,500. On January 15, Year 1, an $1,030 uncollectible account was written-off. What is the net realizable value of accounts receivable immediately after the write-off?

A $28,670B $25,170C $26,200D $27,230

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  1. 3 December, 13:49
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    C $26,200

    Explanation:

    Allowance for Doubtful Accounts is an contra account receivables account. It is adjusted in the account receivable balance to show the net receivable on the balance sheet. The write off entry is made to transfer deduct the balance of account receivable which is now uncollectible from the customers.

    As per given date

    January 1, year 1

    Account receivable = $29,700

    Allowance for Doubtful Accounts = $3,500

    On January 15, Year 1 a write off is made as follow

    Dr. Allowance for Doubtful Accounts $1,030

    Cr. Account receivable $1,030

    These balance are deducted from the account receivable balance and Allowance for Doubtful Accounts balance.

    Account receivable = $29,700 - $1,030 = $28,670

    Allowance for Doubtful Accounts = $3,500 - $1,030 = $2,470

    Realizable Value of Account receivable = $28,670 - $2,470 = $26,200
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