Question

On January 1, Year 1, the Accounts Receivable balance was $21,000 and the balance in the Allowance for Doubtful Accounts was $1,900. On January 15, Year 1, an $530 uncollectible account was written-off. What is the net realizable value of accounts receivable immediately after the write-off

Answer 1

Answer:

$19,100

Explanation:

Accounts receivable represents amount owed to a business by its customers for products or services offered. It is payable in the future.

When collection is uncertain the amount is put in doubtful account.

If an amount is confirmed to be uncollectible it is written off as a loss

In this scenario we are calculating realisable value after write-off

Account receivable after write-off = Account receivable balance - Uncollectible amount

Account receivable after write-off= 21,000 - 530= $20,470

Allowance balance after write-off= Doubtful account - Uncollectible account

Allowance balance after write-off= 1,900 - 530 = $1,370

Net realisable value after write-off= 20,470 - 1,370= $19,100