1 answer

Brief Exercise 8-3 At the end of 2016, Sheridan Company has accounts receivable of $665,400 and...

Question:

Brief Exercise 8-3 At the end of 2016, Sheridan Company has accounts receivable of $665,400 and an allowance for doubtful accounts of $23,480. On January 24, 2017, it is learned that the company’s receivable from Madonna Inc. is not collectible and therefore management authorizes a write-off of $4,415. (a) Prepare the journal entry to record the write-off. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

(b) What is the cash realizable value of the accounts receivable before the write-off and after the write-off?


Answers

(a)

Bad debt expense $4,415
Allowance for doubtful accounts $4,415

(b)

Cash realizable value of accounts receivable = Accounts receiavble - Allowance for doubtful accounts

Cash realizable value of accounts receivable before write off = $665,400 - $23,480

= $641,920

Cash realizable value of accounts receivable after write off = ($665,400 - $4,415) - ($23,480 - $4,415)

= $641,920

.

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