Question

On January 15, 2016, the accounts receivable balance was $7,000 and the balance in the allowance for doubtful accounts was $700. On January 16, 2016, a $200 uncollectible account was written-off. The net realizable value of accounts receivable on January 16 immediately after the write-off is:

a. $6,300
b. $6,800
c. $6,500
d. $7,900

Answer 1

The net realizable value of accounts receivable after writing off a $200 uncollectible account is determined by subtracting the write-off from the allowance for doubtful accounts, resulting in a value of $6,500.

Step-by-step explanation:

The net realizable value of accounts receivable immediately after writing off a $200 uncollectible account is calculated by subtracting the uncollectible account from the accounts receivable balance and adjusting the allowance for doubtful accounts accordingly.

On January 15, 2016, the accounts receivable balance was $7,000, and the balance in the allowance for doubtful accounts was $700. After the $200 write-off on January 16, the balance in the allowance for doubtful accounts would be $700 - $200 = $500. The net realizable value is the accounts receivable balance minus the adjusted allowance for doubtful accounts, which is $7,000 - $500 = $6,500.

Therefore, the correct answer is c. $6,500.