Answer:
b. $735,000
Explanation:
Bad debt Expense will be calculated using the percentage of debt loss. The expense will be calculated using the account receivable balance.
Allowance for Doubtful Accounts balance before adjustment = $50,000 Credit
Bad Debt expense based on percentage of receivables = $15,000
This adjustment will added to the balance of $50,000 to make Allowance for Doubtful Accounts ending balance equals to $65,000 ( $50,000 + $15,000 ).
Net realizable value of account receivable is the net value of Allowance for Doubtful Accounts and Account receivable.
Net Realizable value of the accounts receivable = $800,000 - $65,000 = $735,000
