Brief Exercise 8-3 At the end of 2013, Morley Co. has accounts receivable of $70

Question

Brief Exercise 8-3

At the end of 2013, Morley Co. has accounts receivable of $707,900 and an allowance for doubtful accounts of $24,260. On January 24, 2014, it is learned that the company’s receivable from Spears Inc. is not collectible and therefore management authorizes a write-off of $4,050.

(a) Prepare the journal entry to record the write-off

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

Explanation / Answer

Answer a Journal entry to record the write-off Account titles and explanation Debit Credit In $ In $ Allowance for doubtful accounts 4050 Accounts Receivable 4050 Answer b Cash realizable value of the accounts receivable before the write-off and after the write off Before Write off After Write off In $ In $ Accounts Receivable 707900 703850 (-) Allowance for doubtful debts 24260 20210 Cash realizable value of the accounts receivable 683640 683640

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