Question

At the end of 2016, Coronado Industries has accounts receivable of $762,000 and an allowance for doubtful accounts of $22,520. 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 $4,398.

(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
Enter an account title	Enter a debit amount	Enter a credit amount
Enter an account title	Enter a debit amount	Enter a credit amount

(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		$Enter a dollar amount		$Enter a dollar amount

Answer 1

Solution: A
	Journal Entries
	Date	Account Title and explanation	Debit	Credit
		Allowance for Doutfull Accoutns	$                     4,398
	1	Account Receivable - Madona Inc.		$                       4,398
		(To Record the write off the customer account)
Solution: B
		Calculation of cash realizable value of the account receivable before write-off
		Account Receivable	$               7,62,000
		Less: Allowance for Doubtfull Accounts	$                  22,520
		Cash Realizable Value	$               7,39,480
		Calculation of cash realizable value of the account receivable After write-off
		Account Receivable ($ 762,000 - $ 4,398)	$               7,57,602
		Less: Allowance for Doubtfull Accounts ($ 22,520 - $ 4,398)	$                  18,122
		Cash Realizable Value	$               7,39,480
	Answer =		Before Write-Off	After Write-Off
		Cash realizable value	$               7,39,480	$                 7,39,480