Answer: $262,000
Explanation:
The Net Accounts Receivables refers to the amount that the customers of the company purchased on credit.
The Allowance for Doubtful Debt Account is the amount that's the company estimates it will not receive from it's credit customers so as to cater for the risk that some won't pay.
Net Accounts Receivables is therefore calculated by removing the Allowance for Doubtful Debt from the Accounts Receivables.
= Gross Accounts receivable - Allowance for Doubtful Accounts
= 280,000 - 18,000
= $262,000
It is worthy of note that the Customer balance written off of $1,800 will not be taken from the Accounts Receivables Account because it has already been catered for in the Allowance for Doubtful Debts. It will therefore be removed from the Allowance for Doubtful Debt Account.
Answer:
$262,000
Explanation:
Allowance for Doubtful Accounts is deducted from the receivable balance on the balance sheet and shown as a deduction. As this is an contra account receivable account, which has a negative balance according to the account receivables balance. The value reported on the balance sheet is net of Allowance for Doubtful Account balance.
Journal Entry for Write off
Dr. Allowance for Doubtful Accounts $1,800
Cr. Account Receivable $1,800
Debit in Allowance for Doubtful Accounts and Credit in Account Receivables account will reduce their balances.
Allowance for Doubtful Accounts balance = $18,000 - $1,800 = $16,200
Account Receivable = $280,000 - $1,800 = $278,200
Net Account receivable = $278,200 - $16,200 = $262,000
