Question

On December 31, 2017, Extreme Fitness has adjusted balances of $950,000 in Accounts Receivable and $85,000 in Allowance for Doubtful Accounts. On January 2, 2018, the company learns that certain customer accounts are not collectible, so management authorizes a write-off of these accounts totaling $25,000. a. What amount would the company report as its net accounts receivable on December 31, 2017? b. Prepare the journal entry to write off the accounts on January 2, 2018 c. Assuming no other transactions occurred between December 31, 2017, and January 3, 2018, what amount would the company report as its net accounts receivable on January 3, 2018? Has net accounts receivable changed from December 31, 2017? Complete this question by entering your answers in the tabs below. Reg A Reg B Reg CI Reg C2 What amount would the company report as its net accounts receivable on December 31, 2017 Net Accounts Receivable ReqB >

Answer 1

Accounts receivable is the term that refers to the money that the business should receive from its customers for the goods or services it has rendered. Allowance is a way to write down the accounts receivable which may not be recovered.

a.

Accounts receivable	950,000
Less: allowance for doubtful doubts	-85000
Net accounts receivable	865,000

b

Date	Particulars	Debit ($)	Credit ($)
	Accounts receivable	25000
	Allowance for doubtful debt		25000
	(To record the write off)

c.

Accounts receivable (950,000 -25,000)	925000
Less: allowance for doubtful debts (85000 - 25000)	60000
Net accounts receivable	865000

This has not changed from December 31, 2017.

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