Question

Blended Company uses the allowance method to account for uncollectible receivables. At the beginning of the​ year, Allowance for Bad Debts had a credit balance of $ 1 comma 300. During the year Blended wrote off uncollectible receivables of $ 2 comma 000. Blended recorded Bad Debts Expense of $ 2 comma 900. Blended's ​year-end balance in Allowance for Bad Debts is $ 2 comma 200. Blended's ending balance of Accounts Receivable is $ 19 comma 400. Compute the net realizable value of Accounts Receivable at​ year-end

A. $ 16 comma 500
B. $ 17 comma 400
C. $ 19 comma 400

Answer 1

$17,200

Step-by-step explanation:

The computation of the net realizable value of Accounts Receivable at​ year-end is shown below:

= Blended's ending balance of Accounts Receivable - Blended's ​year-end balance in Allowance for Bad Debts

= $19,400 - $2,200

= $17,200

This is the answer but the same is not provided in the given options

We simply deduct the ending balance of Allowance for Bad Debts from the ending balance of Accounts Receivable keeping other items ignored, as they are not relevant for the computation part.