Brief Exercise 8-3 At the end of 2016, Sheffield Corp. has accounts receivable o

Question

Brief Exercise 8-3

At the end of 2016, Sheffield Corp. has accounts receivable of $696,800 and an allowance for doubtful accounts of $23,140. 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 $4,248.

(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

Account Titles and Explanation

Debit

Credit

Explanation / Answer

a)

b)

Note 1: Before Write Off:

Accounts Receivable - Allowance for Doubtful Accounts

= $ 696,800 - $ 23,140

= $ 673,660

Note 2: After Write Off:

Accounts Receivable - Allowance for Doubtful Accounts

= ($ 696,800- 4,248) -( $ 23,140- 4,248)

= $ 673,660

Account Titles and Explanation Debit Credit Allowance for Doubtful Accounts 4,248 Accounts Receivable 4,248

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