Question

On January 1, 2016, the Accounts Receivable balance was $22,600 and the balance in the Allowance for Doubtful Accounts was $2,200. On January 15, 2016 an $620 uncollectible account was written-off. The net realizable value of accounts receivable immediately after the write-off is:

Answer 1

The net realizable value of Accounts receivable is $20,400

Step-by-step explanation:

The net realizable value of Accounts receivable is:

Opening receivables balance $22,600

Less doubtful debts at beginning $2,200

Net realizable value at beginning is $20,400.

Opening receivables balance $22,600

Less adjustment for uncollectible and written off debt $620

Closing receivables balance $21,980

Less doubtful debts at beginning $2,200

Adjustment to doubtful debt (based on written off debt) $620

Closing doubtful debt provision $1,580

Net realizable value at closing is $20,400.

Answer 2

$19,780

Step-by-step explanation:

Net realizable value of accounts receivable = Accounts Receivable balance - Balance in the Allowance for Doubtful Accounts - Uncollectible account was written-off

Therefore, we have:

Net realizable value of accounts receivable = $22,600 - $2,200 - $620 = $19,780.

Therefore, the net realizable value of accounts receivable immediately after the write-off is $19,780.