E7-8.

(Recording Bad Debts)

(LO 3) At the end of 2017, Aramis Company has accounts receivable of $800,000 and an allowance for doubtful accounts of $40,000. On January 16, 2018, Aramis Company determined that its receivable from Ramirez Company of $6,000 will not be collected, and management authorized its write-off.

Instructions

(a)

Prepare the journal entry for Aramis Company to write off the Ramirez receivable.

(b)

What is the net realizable value of Aramis Company's accounts receivable before the write-off of the Ramirez receivable?

(c)

What is the net realizable value of Aramis Company's accounts receivable after the write-off of the Ramirez receivable?