Question

Taylor, Inc. had accounts receivable of $310,000 and an allowance for doubtful accounts of $19,500 just before writing off as worthless an account receivable from Burton Company of $1,300. The net realizable value of the accounts receivable before and after the write-off were:

Answer 1

Net realizable value before write off and after write off remains the same. since the write off is recorded as a debit to uncollectible account and credit to accounts receivables account. The net realizable value is $ 290,500.

Step-by-step explanation:

Net Realizable value before write off =

Accounts Receivable - Allowance for doubtful accounts

$ 310,000 - $ 19,500 = $ 290,500

The recording for the write off is

Allowance for doubtful accounts Debit $ 1,300

Accounts receivables Credit $ 1,300

Balances after write off are

Accounts Receivable $ 310,000 - $ 1,300 = $ 308,700

Allowance for doubtful accounts $ 19.500- $ 1,300 = $ 18,200

Net realizable value after write off is $ 290,500

There is no change in the net realizable value of receivables