Question

On January 1, 2013, the Accounts Receivable balance was $18,500 and the balance in the Allowance for Doubtful Accounts

Answer 1

Answer: A

Explanation: Recieveable balance $18500, this is the cash inflow of the company

Allowance for doubtful accounts $1400 this is usually a percentage of money set aside from cash inflow for debts e.t.c.

Unaccountable account $400 usually debts

Receivable after deduction of allowance of doubtful accounts.

$18500 - $1400 = $ 17100

Allowance of doubtful accounts after deduction of debts

$1400 - $400 = $1000

Amount receivable immediately after write off

$17100 + $1000 = $18100

Answer 2

Answer:

C. $17,100.

Explanation:

Before Write off

January 1, 2013 Accounts Receivable balance  $18,500

Less Allowance for Doubtful Accounts was $1,400

Estimated realizable accounts accounts receivable  $ 17,100

The write off method does not affect the realizable value of the accounts receivable. Both assets and net income are affected in the period bad debts expense is predicted and recorded with an adjusting entry.

After Write Off

Accounts Receivable                                 $ 18,100

Less Allowance for Doubtful Accounts was $1,000

Estimated realizable accounts accounts receivable  $ 17,100

Accounts Receivable                                                      $ 52,000

Less Net realized accounts accounts receivable  $   48,500

Uncollectibles  (bad debts)                                   $ 3,500