On December 31, Year 1, the West Corporation estimated that $6,000 of its receivables might not be collected. Before adjusting entries, the balance of Accounts Receivable and the Allowance for Doubtful Accounts respectively was $150,000 and zero on December 31, Year 1. On February 1, Year 2, West wrote-off of a delinquent account from one of its customers. West Corp. uses the allowance method of accounting for uncollectible accounts. Indicate whether each of the following statements is true or false.
_____a) The net realizable value of accounts receivable (after the appropriate adjusting entry on December 31, Year 1) was $144,000.
_____b) The write-off of the account on February 1, Year 2, did not affect the net realizable value of West's accounts receivable.
_____c) The adjusting entry on December 31, Year 1, had no effect on West's total assets.
_____d) The write-off entry on February 1, Year 2, had no effect on West's total assets.
_____e) The write-off entry on February 1, Year 2, decreased net income for Year 2.

Question

Quizplus · Accepted Answer

The Answer of On December 31, Year 1, the West Corporation estimated that $6,000 of its receivables might not be collected. Before adjusting entries, the balance of Accounts Receivable and the Allowance for Doubtful Accounts respectively was $150,000 and zero on December 31, Year 1. On February 1, Year 2, West wrote-off of a delinquent account from one of its customers. West Corp. uses the allowance method of accounting for uncollectible accounts. Indicate whether each of the following statements is true or false.
_____a) The net realizable value of accounts receivable (after the appropriate adjusting entry on December 31, Year 1) was $144,000.
_____b) The write-off of the account on February 1, Year 2, did not affect the net realizable value of West's accounts receivable.
_____c) The adjusting entry on December 31, Year 1, had no effect on West's total assets.
_____d) The write-off entry on February 1, Year 2, had no effect on West's total assets.
_____e) The write-off entry on February 1, Year 2, decreased net income for Year 2.

On December 31, Year 1, the West Corporation Estimated That