E7-8 (Recording Bad Debts) At the end of 2010 Sorter Company has accounts receivable of $900,000

and an allowance for doubtful accounts of $40,000. On January 16, 2011, 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 net realizable value of Sorter Companys accounts receivable before the write-off of

the Ordonez receivable?

(c) What is the net realizable value of Sorter Companys accounts receivable after the write-off of the

Ordonez receivable?