Girlpower Co has the following balances in its general ledger.
Accounts receivable $57 000
Less allowance for doubtful debts 3000
$54 000
If a debt for $900, previously provided for as doubtful, is written off as bad, what is the estimated net realisable value of accounts receivable after the write off?

Question

Quizplus · Accepted Answer

The write-off of a $900 debt previously accounted for in the allowance for doubtful debts does not change the net realisable value of accounts receivable. The allowance for doubtful debts is used to estimate realizable value by accounting for potential losses due to bad debts. When a specific debt is written off, it reduces both the accounts receivable and the allowance by the same amount, leaving the net realisable value unchanged at $54,000.

Girlpower Co Has the Following Balances in Its General Ledger