Question

On January 1, Year 2, the Accounts Receivable balance was $33,800 and the balance in the Allowance for Doubtful Accounts was $4,300. On January 15, Year 2, an $1,250 uncollectible account was written-off. The net realizable value of accounts receivable immediately after the write-off is:

Answer 1

Answer:

$33800 is the net realizable value of accounts.

Explanation:

When we do entries we record $33800 as accounts receivable at the begining of the month and the balance on allowance for doubtful accounts is $4300 now if an noncollectable account was written off it means that the person owing failed to pay therefore that already is affecting the allowance for doubtful debtors and not the accounts receivable directly.

Answer 2

Answer:

$29,500

Explanation:

When sales are made on credit/account, entries required are

Debit Accounts receivables

Credit Revenue

where the company estimates that part of the receivables may be incollectible,

Debit Bad debts expense

Credit Allowance for doubtful debt

Where the debts then go bad, to write them off,

Debit Allowance for doubtful debt

Credit Accounts receivable

The amount written off is posted the entries posted are between the allowance for doubtful debt and accounts receivable. Hence, the write off would not change the net receivables

As such,

= $33,800 - $4,300

= $29,500