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?

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andromache andromache · Answer 1 · 2019-12-05T09:01:23+01:00

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