Ask Question
28 January, 04:43

At the end of 2016, Nash's Trading Post, LLC has accounts receivable of $635,600 and an allowance for doubtful accounts of $23,140. 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?

+1
Answers (1)
  1. 28 January, 04:57
    0
    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
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “At the end of 2016, Nash's Trading Post, LLC has accounts receivable of $635,600 and an allowance for doubtful accounts of $23,140. 1. On ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers