The amount of a company's accounts receivable on its balance sheet is the amount of money its customers owe it for products and services they purchased from the company on credit. To match a company's expenses to the accounting period in which it earns its revenues, a company must estimate the portion of accounts receivable that customers are not likely to pay, called allowance for doubtful accounts. Net receivables is the amount of accounts receivable that the company is likely to collect from its customers. Calculate this amount from a company's balance sheet.
Find a company's accounts receivable listed in the current assets section of its balance sheet. For example, assume a company has $500,000 in accounts receivable.
Find the company's allowance for doubtful accounts or reserve for doubtful accounts listed below accounts receivable in the current assets section of its balance sheet. In the example, assume the company has $30,000 in allowance for doubtful accounts.
Subtract the company's allowance for doubtful accounts from its accounts receivable balance to calculate its net receivables. In the example, subtract $30,000 from $500,000 to get $470,000 in net receivables.