Our company reports net accounts receivable of $200,000 on our December 31, 2017 balance sheet. We have a credit balance of $25,000 in allowance for doubtful accounts. What is the balance in accounts receivable?

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Business

Lillianna Weber

20 July, 05:23

Our company reports net accounts receivable of $200,000 on our December 31, 2017 balance sheet. We have a credit balance of $25,000 in allowance for doubtful accounts. What is the balance in accounts receivable?

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Stephen · Answer 1

Answer: The balance in accounts receivable is $225,000.

Explanation: The amount in accounts receivable above was derived by adding the allowance for doubtful debt of $25,000 to the net accounts receivable of $200,000.

In the question, $200,000 was stated as the net accounts receivable meaning that the allowance was initially backed out from the receivable amount, if you want to get the accounts receivable, you have to add back the allowance for doubtful debt to the net balance of receivable.

Normally, to determine the carrying amount of accounts receivable, we need to back out the allowance for bad debt, because that is the portion of the receivable that is deemed uncollectible. Both items are balance sheet items.