During the year, Liptom Company made an entry to write off a $4,000 uncollectible account. Before this entry was made, the balance in accounts receivable was $60,000 and the balance in the allowance account was $4,500 (normal balance). What is the net realizable value of accounts receivable after the write-off entry?
A) $60,000
B) $64,500
C) $55,500
D) $51,500

Question

Quizplus · Accepted Answer

The net realizable value of accounts receivable is calculated as Accounts Receivable minus the Allowance for Doubtful Accounts. After the write-off, Accounts Receivable is $56,000 ($60,000 - $4,000) and the Allowance remains $500 ($4,500 - $4,000), so the net realizable value is $55,500 ($56,000 - $500).

During the Year, Liptom Company Made an Entry to Write