Oakwood Company had accounts receivable of $758,000 and an allowance for doubtful accounts of $27,000 just prior to writing off as worthless a customer’s $10,500 account receivable.

Oakwood Company had accounts receivable of $758,000 and an allowance for doubtful accounts of $27,000 just prior to writing off as worthless a customer’s $10,500 account receivable. The net realizable value of Oakwood’s accounts receivable as shown by the accounting records before and after the write off was as follows:

Multiple Choice

Before After
$731,000 $720,500
Before After
$735,000 $741,500
Before After
$731,000 $731,000
Before After
$758,000 $747,500

Expert Solution

Net realizable value before write-off = Accounts receivable - Allowance for doubtful accounts

= $758,000 - $27,000

= $731,000

Net realizable value before write-off = (Accounts receivable - Accounts written off) - (Allowance for doubtful accounts - Accounts written off)

= ($758,000 - $10,500) - ($27,000 - $10,500)

= $747,500 - $16,500

= $731,000

Before	After
$731,000	$731,000

is the correct answer.

DEEPIKA GOYAL answered 2 years ago

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