At the end of 2015, Sorter Company has accounts receivable of £900,000 and an allowance for doubtful accounts of £40,000. On January 16, 2016, Sorter Company determined that its receivable from Ordonez Company of £8,000 will not be collected, and management authorized its write-off.

Instructions

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

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

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