At the end of 2019, Sorter plc has accounts receivable of £900,000 and an allowance for doubtful accounts of £40,000. On January 16, 2020, Sorter determined that its receivable from Ordonez Orchards £8,000 will not be collected, and management authorized its write-off.
Instructions
a. Prepare the journal entry for Sorter plc to write off the Ordonez receivable.
b. What is the cash realizable value of Sorter plc's accounts receivable before the write-off of the Ordonez receivable?
c. What is the cash realizable value of Sorter plc's accounts receivable after the write-off of the Ordonez receivable?