Cortez Co. had accounts receivable totalling $450,000 and an allowance for doubtful accounts with a balance of $5,000 on June 1, 2018. On June 2 Cortez wrote off $2,400 of uncollectible accounts. The net carrying value of accounts receivable before and after the write-off was
A) Before $450,000 | After $447,600
B) Before $445,000 | After $445,000
C) Before $445,000 | After $442,600
D) Before $450,000 | After $445,000
E) Before $450,000 | After $450,000

Question

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Before the write-off, the net carrying value of accounts receivable is calculated by subtracting the allowance for doubtful accounts ($5,000) from the total accounts receivable ($450,000), which equals $445,000. After the write-off of $2,400, the allowance for doubtful accounts is reduced by the same amount, but this does not affect the net carrying value of accounts receivable, which remains at $445,000. The write-off reduces both the accounts receivable and the allowance for doubtful accounts, but the net effect on the carrying value is zero.

Cortez Co Had Accounts Receivable Totalling $450,000 and an Allowance for for Doubtful