Question

Gideon Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Gideon Company wrote off the $2,000 uncollectible account of its customer, A. Hopkins. On July 10, Gideon received a check for the full amount of $2,000 from Hopkins. On July 10, the entry or entries Gideon makes to record the recovery of the bad debt is:

a. Cash 2,000
Accounts Receivable—A. Hopkins2,000
b. Cash 2,000
Bad debts expense2,000
Accounts Receivable—A. Hopkins 2,000
Bad debts expense2,000
c. Cash 2,000
Accounts Receivable—A. Hopkins2,000
Allowance for Doubtful Accounts 2,000
Accounts Receivable—A. Hopkins2,000
Accounts Receivable—A. Hopkins 2,000
d. Cash2,000
Accounts Receivable—A. Hopkins 2,000
Allowance for Doubtful Accounts2,000
e. Cash 2,000
Accounts Receivable—A. Hopkins2,000

Answer 1

d.

Dr Accounts Receivable—A. Hopkins 2,000

Cr Allowance for Doubtful Accounts2,000

Dr Cash2,000

Cr Accounts Receivable—A. Hopkins 2,000

Step-by-step explanation:

First it's necessary to recognize the recovery of the bad debt, doing the following entry:

Accounts Receivable—A. Hopkins 2,000

Allowance for Doubtful Accounts 2,000

With this entry we reverse the made at the moment of the write off.

Then the company registered the collecting of the debt:

Cash 2,000

Accounts Receivable—A. Hopkins 2,000