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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The answer contains journal entries for bad debts,provision for bad debts and finding out the cash realisable value of accounts receivable.
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1. Journal entry to record write off:
Bad debts a/c Dr 6400
To provision for doubtful ...
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