Harleston, Inc. has Accounts Receivable of $280,000 and an Allowance for Doubtful Accounts of $18,000. If it writes-off a customer account balance of $1,800, what is the amount of its net accounts receivable? Multiple Choice $280,000 $262,000 $278,200 $260,200

$262,000

Explanation:

When a company makes sales on account, debit accounts receivable and credit sales. Based on assessment, some or all of the receivables may be uncollectible.  

To account for this, debit bad debit expense and credit allowance for doubtful debt. Should the debt become uncollectible (i.e go bad), debit allowance for doubtful debt and credit accounts receivable.

Where a debit that had previously been determined to have gone bad gets settled, debit cash and credit bad debt expense.

The net receivable is the difference between the accounts receivable and the allowance for doubtful debt balance. The amount written off would be deducted from the two balances as expressed.

Allowance balance = $18,000 - $1,800

= $16,200

Accounts receivable balance = $280,000 - $1,800

= $278,200

Net accounts receivable = $278,200  - $16,200

= $262,000

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