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On December 31, 2017, Extreme Fitness has adjusted balances of $82,640 in Accounts Receivable and $2,517...

On December 31, 2017, Extreme Fitness has adjusted balances of $82,640 in Accounts Receivable and $2,517 in Allowance for Doubtful Accounts. Assume that on February 2, 2018, Extreme Fitness received a payment of $781 from one of the customers whose balance had been written off.
What amount would the company report as its accounts receivable balance on February 2, 2018?
On December 31, 2017, Extreme Fitness has adjusted balances of $82,640 in Accounts Receivable and $2,517 in Allowance for Doubtful Accounts. Assume that on February 2, 2018, Extreme Fitness received a payment of $781 from one of the customers whose balance had been written off.
What amount would the company report as its accounts receivable balance on February 2, 2018?
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Answer #1

Accounts receivable, December 31 = $82,640

Allowance for doubtful accounts, December 31 = $2,517

Bad debt written off recovers on February 2, 2018 = $781

Allowance for doubtful accounts, February 2018 = Allowance for doubtful accounts, December 31 + Bad debt written off recovers on February 2, 2018

= 2,517+781

= $3,298

On February 2, 2018 accounts receivable will be same as accounts receivable balance on December 31 , 2017 i.e $82,640.

Due to bad debts recovered, Cash and allowance for doubtful accounts will increase. It will not effect accounts receivable balance.

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