Tabor Company had trade receivables of $450,000 and an allowance for doubtful accounts of $15,500 just prior to writing off as worthless a trade receivable from Fox Company of $5,000. What was the net realizable value of trade receivables as shown by the accounting record before and after the write-off?
$\begin{array} { l r r } && \text { Before } & \text { After } \\end{array}$
a) $\begin{array} { l r r } & 450,000 & 450,000 \\end{array}$
b) $\begin{array} { l r r } & 15,000 & 439,500 \\end{array}$
c) $\begin{array} { l r r } & 434,500 & 429,500 \\end{array}$
d) $\begin{array} { l r r } & 434,500 & 434,500 \\end{array}$

Question

Tabor Company had trade receivables of $450,000 and an allowance for doubtful accounts of $15,500 just prior to writing off as worthless a trade receivable from Fox Company of $5,000. What was the net realizable value of trade receivables as shown by the accounting record before and after the write-off? 
$\begin{array} { l r  r } && \text { Before } & \text { After } \\end{array}$
a) $\begin{array} { l r  r }  & 450,000 & 450,000 \\end{array}$
b)  $\begin{array} { l r  r } & 15,000 & 439,500 \\end{array}$
c) $\begin{array} { l r  r }  & 434,500 & 429,500 \\end{array}$
d) $\begin{array} { l r  r }  & 434,500 & 434,500 \\end{array}$

Quizplus · Accepted Answer

Before the write-off, the net realizable value of trade receivables is calculated by subtracting the allowance for doubtful accounts ($15,500) from the total trade receivables ($450,000), which equals $434,500. After the write-off of the $5,000 receivable from Fox Company, the allowance for doubtful accounts is reduced by $5,000, but this does not affect the net realizable value of the trade receivables, which remains at $434,500. The write-off reduces both the allowance for doubtful accounts and the total trade receivables by the same amount, leaving the net realizable value unchanged.

Tabor Company Had Trade Receivables of $450,000 and an Allowance Before After \begin{array} { l r r } && \text { Before } & \text { After } \\\end{array}​​ Before ​ After ​

Tabor Company Had Trade Receivables of $450,000 and an Allowance $\begin{array} { l r r } && \text { Before } & \text { After } \\\end{array}$