Question

In reviewing the accounts receivable, the cash realizable value is $14,000 before the write-off of a $1,800 account. what is the cash realizable value after the write-off?

Answer 1

The net realizable value is equal to the accounts receivable less the costs. By definition, a write-off is any legitimate deduction or reduction on the value of an asset. Hence, write-off is considered as a cost. Therefore, the realizable value (RV) is:

RV = $14,000 – $1,800

RV = $12,200