When a company receives payment from a customer whose account was previously written off,the account is reinstated and the net realizable value of Accounts Receivable increases.

Question

Quizplus · Accepted Answer

Reinstating an account receivable is performed by reversing the previous write-off;doing so increases the balances in Accounts Receivable and Allowance for Doubtful Accounts.Because the Allowance account is a contra asset account,the increase in it offsets the increase in the Accounts Receivable account,and the net realizable value is unchanged.

When a Company Receives Payment from a Customer Whose Account