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Taylor, Inc
Taylor, Inc. had accounts receivable of $320,000 and an allowance for doubtful accounts of $14,000 just before writing off as worthless an account receivable from Burton Company of $1,210. The net realizable value of the accounts receivable before and after the write-off were
Expert Solution
Before write off:
Net realizable value of the accounts receivable = $320,000 - $14,000
= $306,000
After write off - account receivable from Burton Company of $1,210:
This entry has dual impact- Account receivable will decreased as well at same time writoff will be adjusted from allowance for doubtful accounts.
Net realizable value of the accounts receivable = ($320,000 - $1,210) - ($14,000 - $1,210)
= $318,790 - $12,790
=$306,000
Thus accounts receivable before and after the write-off were $306,000.
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