Question

On January 1, Year 1, the Accounts Receivable balance was $30,600 and the balance in the Allowance for Doubtful Accounts was $3,700. On January 15, Year 1, an $1,070 uncollectible account was written-off. What is the net realizable value of accounts receivable immediately after the write-off?

Answer 1

The net realizable value of the accounts receivable immediately after the writing-off the uncollectible is $26,900

Step-by-step explanation:

The formula to compute the net realizable value of accounts receivable is:

Net realizable value = Balance of accounts receivable - Balance in the Allowance for Doubtful Accounts

= $30,600 - $3,700

= $26,900

The amount of uncollectible which is written off will not be deducted from the balance of accounts receivable as this amount is already included in Allowance for doubtful account.