(Recording Bad Debts) At the end of 2017, Aramis Company has accounts receivable of $800,000 and an allowance for doubtful accounts of $40,000. On January 16, 2018, Aramis Company determined that its receivable from Ramirez Company of $6,000 will not be collected, and management authorized its write-off.Instructions(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?
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
(Recording
Instructions
(a) Prepare the
(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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