Accounts receivable has a balance of $30,000 and the Allowance for Bad Debts has a credit balance of $3,000. The allowance method is used. What is the net realizable value before and after a $2,000 Account Receivable is written off?
A)$27,000; $27,000
B)$14,300; $14,300
C)$16,000; $15,940
D)$16,000; $16,000

Question

Quizplus · Accepted Answer

The net realizable value is calculated as Accounts Receivable minus Allowance for Bad Debts. Before the write-off, it is $30,000 - $3,000 = $27,000. After writing off $2,000, both Accounts Receivable and Allowance for Bad Debts decrease by $2,000, keeping the net realizable value the same at $27,000.

Accounts Receivable Has a Balance of $30,000 and the Allowance