Question

At the end of 2022, Honey Co. has accounts receivable of $698,000 and an allowance for doubtful accounts of $27,500. On January 24, 2023, it is learned that the company’s receivable from Beehive Inc. is not collectible and therefore management authorizes a write-off of $3,929.

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

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

Answer 1

1. journal entry to record the write off:

date	accounts	debit	credit
jan 24 2023	allowance for doubtful accounts	3,929
	..............To accounts receivable		3,929

2.

cash realisable value of accounts receivable before the write off = 698,000 - 27,500 =>670,500.

cash realisable value of accounts receivable after the write off = (698,000 - 3929 written off) - (27,500-3929 written off)=>670,500.