Taylor,Inc.had accounts receivable of $310,000 and an allowance for doubtful accounts of $19,500 just before writing off as worthless an account receivable from Burton Company of $1,300.The net realizable value of the accounts receivable before and after the write-off were:
A)$290,500 before and $289,200 after.
B)$290,500 before and $290,500 after.
C)$310,000 before and $308,700 after.
D)$329,500 before and $328,200 after.

Question

Quizplus · Accepted Answer

The net realizable value of accounts receivable is calculated as the total accounts receivable minus the allowance for doubtful accounts. Before the write-off, the net realizable value is $310,000 - $19,500 = $290,500. After writing off the $1,300 account, the allowance for doubtful accounts is used to absorb the loss, so the net realizable value remains unchanged at $290,500.