Larry Kordoski owns a clothing store that has a $31,000 balance in Accounts Receivable and a $1,600 balance in Allowance for Doubtful Accounts.

Larry Kordoski owns a clothing store that has a $31,000 balance in Accounts Receivable and a $1,600 balance in Allowance for Doubtful Accounts.

Required:

1.Determine the net realizable value of the accounts receivable.
2.Assume that an account receivable in the amount of $350 was written off using the allowance method. Determine the net realizable value of the accounts receivable after the write off.

Solution 1

Calculation for the net realizable value of the accounts receivable:

Particulars	Amount
Accounts receivable A/c	31,000
Less: allowance for doubtful accounts	1,600
Net receivables	29,400

Solution 2

Calculation for the net realizable value of the accounts receivable after the write off:

Particulars	Amount
Accounts receivable A/c	30,650
Less: allowance for doubtful accounts	1,250
Net receivables	29,400