On December 31, Year 1, the West Corporation estimated that $6,000 of its receivables might not be collected. At the end of Year 1, the unadjusted balances of Accounts Receivable and Allowance for Doubtful Accounts were $150,000 and zero. On February 1, Year 2, West wrote-off a delinquent account from one of its customers. West Corporation uses the allowance method. Indicate whether each of the following statements is true or false.
a)The net realizable value of accounts receivable (after the appropriate adjustment at the end of Year 1)was $144,000.b)The write-off of the account on February 1 Year 2 did not affect the net realizable value of West's accounts receivable.c)The adjustment to record uncollectible account expense at the end of Year 2 had no effect on West's total assets.d)The February 1 write-off had no effect on West's Year 2 total assets.e)The February 1 write-off decreased Year 2 net income.

Question

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b)True c)False d)True e)Fa)This is true. The net realizable value of accounts receivable after the adjustment is $144,000, calculated as $150,000 accounts receivable minus $6,000 allowance for doubtful accounts.b)This is true. The write-off decreased accounts receivable and allowance for doubtful accounts equally, so it did not affect net realizable value.c)This is false. The adjustment decreased assets by increasing the allowance for doubtful accounts, a contra asset account.d)This is true. The write-off decreased assets (accounts receivable)and increased assets (by decreasing the allowance for doubtful accounts, a contra asset account), resulting in no net change in assets.e)This is false. The write-off would not decrease net income since the company uses the allowance method.

On December 31, Year 1, the West Corporation Estimated That