Brief Exercise 8-3 At the end of 2016, Sheridan Company has accounts receivable

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.) Account Titles and Explanation Debit Credit (b) What is the cash realizable value of the accounts receivable before the write-off and after the write-off? Before Write-Off After Write-Off Cash realizable value s

Explanation / Answer

Journal Entries

date

explanation

debit

credit

1-

allowance for doubtful debt

4415

accounts receivables

4415

2-

value of accounts receivables before write off

accounts receivables

665400

less allowance for doubtful debt

23480

accounts receivables net realizable value

641920

3-

value of accounts receivables after write off

accounts receivables

665400-4415

660985

less allowance for doubtful debt

23480-4415

19065

accounts receivables net realizable value

641920

Journal Entries

date

explanation

debit

credit

1-

allowance for doubtful debt

4415

accounts receivables

4415

2-

value of accounts receivables before write off

accounts receivables

665400

less allowance for doubtful debt

23480

accounts receivables net realizable value

641920

3-

value of accounts receivables after write off

accounts receivables

665400-4415

660985

less allowance for doubtful debt

23480-4415

19065

accounts receivables net realizable value

641920

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