At the end of the year 2010 Sorter Company has accounts receivable of $900,000 and an allowance for doubtful accounts of $40,000. On January 16, 2011, Sorter Company found out that its receivable from Ordonez Company of $8,000 will not be collected and management authorized its write-off.
a) Make the journal entry for Sorter Company to write off the Ordonez receivable.
b) Describe the net realizable value of Sorter Company's accounts receivable before the write-off of Ordonez receivable?
c) Describe the net realizable value of Sorter Company's accounts receivable after the write-off of Ordonez receivable?