Journal entry for bad debt write-off
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At the end of 2007, Aramis Company has accounts receivable of $800,000 and an allowance for doubtful accounts of $40,000. On January 16, 2008, Aramis Company determined that its receivable from Ramirez Company of $6,000 will not be collected, and management authorized its write-off.
(a) Prepare the journal entry for Aramis Company to write off the Ramirez receivable.
(b) What is the net realizable value of Aramis Company's accounts receivable before the write-off of the Ramirez receivable?
(c) What is the net realizable value of Aramis Company's accounts receivable after the write-off of the Ramirez receivable?
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The solution explains the journal entry to write-off a bad debt
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(a) Prepare the journal entry for Aramis Company to write off the Ramirez receivable.
When receivables are written off, the accounts receivable account is credited to remove the receivable. The debit goes to Allowance account. The journal ...
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