At the end of 2013, Donnelly Fitness Centre has adjusted balances of $800,000 in Accounts Receivable and

Question:

At the end of 2013, Donnelly Fitness Centre has adjusted balances of $800,000 in and $55,000 in Allowance for Doubtful Accounts. On January 2, 2014, the company learns that certain customer accounts are not collectable, so management authorizes a write-off of these accounts totalling $5,000.
a. Show how the company would have reported its receivable accounts on December 31, 2013. As of that date, what amount did Donnelly expect to collect?
b. Prepare the journal entry to write off the accounts on January 2, 2014.
c. Assuming no other transactions occurred between December 31, 2013, and January 3, 2014, show how Donnelly would have reported its receivable accounts on January 3, 2014. As of that date, what amount did Donnelly expect to collect? Has this changed from December 31, 2013? Explain why or why not.
Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...