Question

Assume that the balances in Accounts Receivable and the Allowance for Bad Debts accounts were $50,000 and $3,000, respectively, before a write-off entry for $1,000 was recorded. How much would have been reported on the balance sheet as "Net accounts receivable" before the write-off entry was recorded?

Answer 1

$47,000

Step-by-step explanation:

The allowance for bad debt is an account that holds the balances for receivables that may not be collectible.

Such amounts are credited to the allowance for bad debt account and debited to bad debts expense.

Accounts receivables is a debit balance while the allowance for bad debts is a credit balance hence before the write-off entry was recorded,

"Net accounts receivable" = $50,000 - $3,000 = $47,000