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Mila [183]
3 years ago
10

At the end of 2016, Nash's Trading Post, LLC has accounts receivable of $635,600 and an allowance for doubtful accounts of $23,1

40. 1. 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 $4,210. 2. On March 4, 2017, Nash's Trading Post, LLC receives payment of $4,210 in full from Madonna Inc.
Required:

1. Prepare the journal entry to record the write-off.

2. What is the cash realizable value of the accounts receivable before the write-off and after the write-off?
Business
1 answer:
Greeley [361]3 years ago
5 0

Answer:

Explanation:

a. The journal entry is shown below:

Allowance for doubtful accounts A/c Dr $4,210

           To Accounts receivable  $4,210

(Being the write-off amount is recorded)

b. The computations are shown below:

Cash realizable value of the accounts receivable before the write-off would be

= Account receivable balance - Allowance for doubtful accounts

= $635,600 - $23,140

=  $612,460

Cash realizable value of the accounts receivable after the write-off would be

= Account receivable balance - Allowance for doubtful accounts

= $635,600 - $23,140

=  $612,460

The $4,210 has added in both the items but it does not affect the overall balance. So, the balance would remain unchanged

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