Exercise 8-7 Write-off of Accounts Receivable

Norcia Company, which uses the allowance method, began the year with Accounts Receivable of $32,500 and an allowance for uncollectible accounts of $3,200 (credit). The company sold merchandise to Bruce Willis for $3,600 and later received $1,200 from Willis. The rest of the amount due from Willis had to be written off as uncollectible.

Using T accounts, show the beginning balances and the effects of the Willis transactions on Accounts Receivable and Allowance for Uncollectible Accounts.

Accounts Receivable
Bal.		Collection
Sale
Bal.		Write-off
Bal.

Allowance for Uncollectible Accounts
Write-off		Bal.
		Bal.

What is the amount of net accounts receivable before and after the write-off?

	Net accounts receivable
Before Write-off:	$
After Write-off:	$