Question

After the December​ 31, 2019 adjusting journal entries have been​ posted, Sinclair Enterprises has the following account balances​ (all accounts have normal​ balances) are: Account Title Account Balance Accounts Receivable ​$159,000 Allowance for Bad Debts ​ $4,600 Bad Debts Expense ​ $8,200 What is the net realizable value as of December​ 31, 2019?

Answer 1

$154,400

Step-by-step explanation:

net realizable value = accounts receivable - allowance for bad debts

net realizable value = $159,000 - $4,600 = $154,400

The allowance for bad debts account is a contra asset account that reduces accounts receivables account since it adjusts debts that are not expected to be paid.

Answer 2

NET Account Receivable 154,400

Step-by-step explanation:

Account Receivable 159,000

Allowance for Bad debts (4,600)

NET Account Receivable 154,400

The allowance is the contra-assets account which adjust account receivable.

the bad debt expense is an expense, it doesn't go in the balance sheet.