Question

Prior to the write off of a $1,200 customer account, Jeffrey Company had the following account balances. Accounts Receivable: $65,500 and Allowance For Doubtful Accounts: $2,400. The net realizable value of the Accounts Receivable before and after the write-off was: Select one: a. Before After $63,100 $61,900 b. Before After $63,100 $65,500 c. Before After $63,100 $63,100 d. Before After $63,100 $60,700

Answer 1

c. Before After $63,100 $63,100

Step-by-step explanation:

the net realizable value of accounts receivable before the write off = $65,500 - $2,400 = $63,100

the journal entry to record the write off:

Dr Allowance for doubtful accounts 1,200

Cr Accounts receivable 1,200

Since the write off is covered by the allowance account (the balance of the allowance account = $2,400 - $1,200 = $1,200), it will not affect the net realizable value of accounts receivable.