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E7-8 At the end of 2010 Sorter Company has accounts

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E7-8 (Recording Bad Debts)

At the end of 2010 Sorter Company has accounts receivable of $900,000 and an allowance for doubtful accounts of $40,000. On January 16, 2011, Sorter Company determined that its receivable from Ordonez Company of $8,000 will not be collected, and management authorized its write-off.

(a) Prepare the journal entry for Sorter Company to write off the Ordonez receivable.

Description/Account Debit Credit

(b) What is the net realizable value of Sorter Company's accounts receivable before the write-off of the Ordonez receivable?

(c) What is the net realizable value of Sorter Company's accounts receivable after the write-off of the Ordonez receivable?


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