Bert had accounts receivable of $280,000 and an allowance for impairment of $10,800 just before writing off as worthless an account receivable from Ernie Company of $1,600. After writing off this receivable what would be the balance in Bert's Allowance for Impairment?

Question

Quizplus · Accepted Answer

When the account receivable from Ernie Company is written off, the balance in Bert's accounts receivable will decrease by $1,600 and the balance in the allowance for impairment will also decrease by $1,600, since this receivable was already accounted for in the allowance.

Therefore, the new balance in accounts receivable will be $280,000 - $1,600 = $278,400.

The new balance in allowance for impairment will be $10,800 - $1,600 = $9,200 credit balance.

Therefore, the correct answer is C.

Bert Had Accounts Receivable of $280,000 and an Allowance for Impairment