Question

Does this mean that $10 and $20 included $x and $y or excluded it? In other words, is $10 and $20 total receivables or do I need to add $10 and $20 to get total receivables?

	2019	2018
Accounts receivable, net of allowance of $x and $y respectively	$10	$20

Answer 1

Answer

• Concept:
  >Account receivables account have a normal DEBIT balance.
  >Allowance account has a normal CREDIT balance and are CONTRA asset account. This means that these are deducted from the Asset.
  >On Balance Sheet, Account receivables are shown at Net realizable value.
  >Net realizable value = Total Account receivables – Allowance account balance.
• Hence, in your problem, the amount of Account receivables ($10 and $ 20) are the NET balances after DEDUCTING the Allowance account balance existing on those balance sheet date.
• In order to get the TOTAL (or Gross) account receivables for 2019 and 2018, you have to add Net account receivables and Allowance account balance.

	2019	2018
Account receivables, net	$10	$20
Allowance account balance	x	y
Total (or Gross) Account receivables	10 + x	20 + y