Felix has a gross accounts receivable balance of \$18,000. If he uses the direct write-off method and writes off \$1,200 as uncollectible, what is his net accounts receivable after the write-off?

• A. \$16,800
• B. \$1,200
• C. \$19,200
• D. \$18,000

Answer: (A)

Verified step by step guidance

1. Understand the direct write-off method: This method involves directly reducing the accounts receivable balance by the amount deemed uncollectible, without using an allowance for doubtful accounts.
2. Identify the gross accounts receivable balance: Felix's gross accounts receivable balance is \$18,000.
3. Determine the amount to be written off: Felix writes off \$1,200 as uncollectible under the direct write-off method.
4. Calculate the net accounts receivable: Subtract the amount written off (\$1,200) from the gross accounts receivable balance (\$18,000). Use the formula: $\mathrm{Net} \mathrm{Accounts} \mathrm{Receivable}=\mathrm{Gross} \mathrm{Accounts} \mathrm{Receivable} - \mathrm{Amount} \mathrm{Written} \mathrm{Off}$.
5. Review the options provided: Compare the calculated net accounts receivable to the options given (\$16,800, \$1,200, \$19,200, \$18,000) to ensure the correct answer is selected.