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    Bad debts,provision for bad debts

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    At the end of 2006, Endrun Co. has accounts receivable of $700,000 and an allowance for doubtful accounts of $54,000. On January 24, 2007, the company learns that its receivable from Oswego Inc. is not collectible, and management authorizes a write-off of $6,400.
    (a) Prepare the journal entry to record the write-off.
    (b) What is the cash realizable value of the accounts receivable (1) before the write-off and
    (2) After the write-off?

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    Solution Preview

    1. Journal entry to record write off:

    Bad debts a/c Dr 6400

    To provision for doubtful ...

    Solution Summary

    The answer contains journal entries for bad debts,provision for bad debts and finding out the cash realisable value of accounts receivable.

    $2.19

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