At December 31, 2016, Wynne Company reported Accounts Receivable of $45,000 and Allowance for Doubtful Accounts of $3,500. On January 7, 2017, Brown Enterprises declares bankruptcy and it is determined that the receivable of $1,200 from Brown is not collectible.
1. What is the cash realizable value of Accounts Receivable at December 31, 2016?
2. What entry would Wynne make to write off the Brown account?
3. What is the cash realizable value of Accounts Receivable after the Brown account is written off?

Question

Edson Allred · Accepted Answer

Final Answer :  1. Cash realizable value   = $ 45 , 000 − $ 3 , 500 = $ 41 , 500 = \$ 45,000 - \$ 3,500 = \$ 41,500 = $45 , 000 − $3 , 500 = $41 , 500 2.   Allowance for Doubtful Accounts  1 , 200  Accounts Receivable-Brown  1 , 200 \begin{array}{lrr}  	ext {Allowance for Doubtful Accounts  }  & 1,200\ 	ext { Accounts Receivable-Brown }  & & 1,200\\end{array} Allowance for Doubtful Accounts   Accounts Receivable-Brown  ​ 1 , 200 ​ 1 , 200 ​ 3. Cash realizable value   = ( $ 45 , 000 − $ 1 , 200 ) − ( $ 3 , 500 − $ 1 , 200 ) = $ 41 , 500 = ( \$ 45,000 - \$ 1,200 ) - ( \$ 3,500 - \$ 1,200 ) = \$ 41,500 = ( $45 , 000 − $1 , 200 ) − ( $3 , 500 − $1 , 200 ) = $41 , 500

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