Question

Charleston, Inc. has Accounts Receivable of $100,000 and an Allowance for Doubtful Accounts of $18,000. If...

Charleston, Inc. has Accounts Receivable of $100,000 and an Allowance for Doubtful Accounts of $18,000. If it writes-off a customer account balance of $1,800, what is the amount of its net accounts receivable?

Multiple Choice

  • $98,200

  • $100,000

  • $82,000

  • $80,200

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Answer #1

The Net Accounts Receivables refers to the amount that the customers of the company purchased on credit.

The Allowance for Doubtful Debt Account is the amount that's the company estimates it will not receive from it's credit customers so as to cater for the risk that some won't pay.

Net Accounts Receivables is therefore calculated by removing the Allowance for Doubtful Debt from the Accounts Receivables.

= Gross Accounts receivable - Allowance for Doubtful Accounts

= 100000 - 18000

= $82000

It is worthy of note that the Customer balance written off of $1,800 will not be taken from the Accounts Receivables Account because it has already been catered for in the Allowance for Doubtful Debts. It will therefore be removed from the Allowance for Doubtful Debt Account.

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