Question

Daley Company uses the allowance method. At December 31, 2015, the company's balance sheet reports Accounts receivable, Net in the amount of $17,000. On January 2, 2016, Daley writes off a $1,500 customer account balance when it becomes clear that the customer will never pay. What is the amount of accounts receivable, net after the write-off?

a. $1,500

b. $15,500

c. $18,500

d. $17,000

Answer 1

The answer is option d [ $17,000 ]

Explanation : As the company follows allowance method, when it writes off a customer account balance, both the gross accounts receivables and allowance for doubt accounts decreases and as both the account's balance decreases, the net accounts receivables remains the same after write-off.