Prior to the write off of a $30 customer account, Kraft Company had the following account balances: $$\begin{array}{l}
\begin{array} { | l | l | }
\hline \text { Trade receivables } & \$ 9,800 \text { Debit balance } \
\hline \text { Allowance for doubtful accounts } & \$ 500 \text { Credit balance } \
\hline
\end{array}\\
\text { What was the net realizable value of the receivables before and after the write-off? }\\
\begin{array} { | l | r | r | }
\hline & \text { Before } & \text { After } \
\hline \text { A) } & \$ 9,300 & \$ 9,300 \
\hline \text { B) } & \$ 9,400 & \$ 9,270 \
\hline \text { C) } & \$ 9,800 & \$ 9,770 \
\hline \text { D) } & \$ 9,800 & \$ 9,800 \
\hline
\end{array}
\end{array}$$
A) Choice A
B) Choice B
C) Choice C
D) Choice D

Question

Prior to the write off of a $30 customer account, Kraft Company had the following account balances: $$\begin{array}{l}
\begin{array} { | l | l | } 
\hline \text { Trade receivables } & \$ 9,800 \text { Debit balance } \
\hline \text { Allowance for doubtful accounts } & \$ 500 \text { Credit balance } \
\hline
\end{array}\\
\text { What was the net realizable value of the receivables before and after the write-off? }\\
\begin{array} { | l | r | r | } 
\hline & \text { Before } & \text { After } \
\hline \text { A) } & \$ 9,300 & \$ 9,300 \
\hline \text { B) } & \$ 9,400 & \$ 9,270 \
\hline \text { C) } & \$ 9,800 & \$ 9,770 \
\hline \text { D) } & \$ 9,800 & \$ 9,800 \
\hline
\end{array}
\end{array}$$
A) Choice A
B) Choice B
C) Choice C
D) Choice D

Quizplus · Accepted Answer

Before the write-off, the net realizable value of the receivables is calculated by subtracting the allowance for doubtful accounts ($500) from the trade receivables ($9,800), resulting in $9,300. After the write-off of a $30 customer account, the allowance for doubtful accounts is reduced by $30, but this does not affect the net realizable value of the receivables, which remains at $9,300. The write-off reduces both the trade receivables and the allowance for doubtful accounts by the same amount, leaving the net realizable value unchanged.

Prior to the Write Off of a $30 Customer Account