Question

On December 31, 2014, Extreme Fitness has adjusted balances of $800,000 in Accounts Receivable and $55,000 in Allowance for Doubtful Accounts. On January 2, 2015, the company learns that certain customer accounts are not collectible, so management authorizes a write-off of these accounts totaling $10,000. a. What amount would the company report as its net accounts receivable on December 31, 2014

Answer 1

Answer:

$745,000

Explanation:

The computation of the net account receivable is shown below:

The net account receivable is

= Adjusted balance of account receivable  - allowance for doubtful debts

= $800,000 - $55,000

= $745,000

We simply deduct the allowance for doubtful debts from the adjusted balance of account receivable so that the net account receivable could come