At the end of 2013, Morley Co. has accounts receivable of $700,000 (A+ Guaranteed)

At the end of 2013, Morley Co. has accounts receivable of $700,000 and an allowance for doubtful accounts of $25,000. On January 24, 2014, it is learned that the company’s receivable from Spears Inc. is not collectible and therefore management authorizes a write-off of $4,300.

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

b. What is the cash realizable value of the accounts receivable before the write-off and after the write-off?

Here’s the SOLUTION

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