6. Accounts Receivable has a balance of $32,000, and Allowance for Bad Debts has a credit balance of $3,500. The allowance method is used. What is the net realizable value of Accounts Receivable before and after a $2,100 account receivable is written off? Drawing T-accounts will assist you. A) $26,400; $30,600 B) $26,400; $26,400 C) $28,500; $26,400 D) $28,500; $28,500
Answer is C. $ 28500 | |||||
Explanation: | |||||
Accounts receivable (Net balance after write off) | |||||
Accounts receivable (Gross): | 29900 | (32000-2100) | |||
Less: Allowance for bad debts: | 1400 | (3500-2100) | |||
Accounts receivable (Net) | 28500 | ||||
Accounts receivable | |||||
Balance | 32,000 | Allowance for bad debts | 2,100 | ||
Balance | 29,900 | ||||
Allowance for bad debts | |||||
Accounts receivable | 2,100 | Balance | 3,500 | ||
Balance | 1400 | ||||
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