Question

Prime Corp. has an ending balance in the accounts receivable account of $100,000. Prime recorded bad debt expense of $3,000. Prime has an ending balance in the allowance for uncollectible accounts of $7,000. What is the net accounts receivable balance

Answer 1

Answer: The answer is $93,000

Explanation: From the question above, we have:

Ending balance in the accounts receivable account = $100,000

Prime recorded bad debt expense = $3,000

Allowance for uncollectible accounts = $7,000

The net realizable value of accounts receivable is calculated as:

accounts receivable balance - allowance for uncollectible accounts

Therefore we have:

$100,000 - $7,000 = $93,000

The bad debt expenses have been debited already, therefore, they are no longer part of the allowance for uncollectible accounts.