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After the adjusting entry is made to set up the estimate for uncollectible accounts, Accounts...

Question:

After the adjusting entry is made to set up the estimate for uncollectible accounts, Accounts Receivable has a debit balance of $424,300, Note Receivable has a debit balance of $31,000, and Allowance for Doubtful Accounts has a credit balance of $17,000. What is the net realizable value of the Accounts Receivable?

Net Realizable Value Of Accounts Receivables

Net realizable value is the amount of accounts receivables that the company expects to be converted to cash, therefore, any allowance and estimate of amounts to be doubtful are not included. The allowance for doubtful account is a contra-asset account. This account is deducted from total accounts receivables to compute net realizable value.

Answer and Explanation:

Accounts Receivable 424,300
Allowance for Doubtful Accounts -17,000
Net Realizable Value-Accounts Receivables 407,300


The balance of notes receivable presented in the problem is not included in the computation because it does not pertain to "Accounts Receivable".


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Credit Policy & Receivables

from Finance 101: Principles of Finance

Chapter 19 / Lesson 1
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