On January 1, Year 1, the Accounts Receivable balance was $29,700 and the balance in the Allowance for Doubtful Accounts was $3,500. On January 15, Year 1, an $1,030 uncollectible account was written-off. What is the net realizable value of accounts receivable immediately after the write-off?

A $28,670B $25,170C $26,200D $27,230

C $26,200

Explanation:

Allowance for Doubtful Accounts is an contra account receivables account. It is adjusted in the account receivable balance to show the net receivable on the balance sheet. The write off entry is made to transfer deduct the balance of account receivable which is now uncollectible from the customers.

As per given date

January 1, year 1

Account receivable = $29,700

Allowance for Doubtful Accounts = $3,500

On  January 15, Year 1 a write off is made as follow

Dr. Allowance for Doubtful Accounts $1,030

Cr. Account receivable                        $1,030

These balance are deducted from the account receivable balance and Allowance for Doubtful Accounts balance.

Account receivable = $29,700 - $1,030 = $28,670

Allowance for Doubtful Accounts = $3,500 - $1,030 = $2,470

Realizable Value of Account receivable = $28,670 - $2,470 = $26,200

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