Question

John Company uses an allowance method for recording uncollectible receivables. John was notified by Paul that payment on a $1,000 receivable would be forthcoming. John had previously written off the receivable from Paul. The proper journal entry for John to record to reinstate the receivable into the accounts is:

a.Accounts Receivable 1,000
Allow. for Uncollectible Accts 1,000
b.Allow. for Uncollectible Accts 1,000
Sales 1,000
c.Accounts Receivable 1,000
Sales 1,000
d.Accounts Receivable 1,000
Uncollectible Accounts Expense 1,000

Answer 1

The correct journal entry for reinstating a receivable previously written off is to debit Accounts Receivable and credit Allowance for Uncollectible Accounts, which is option a in the provided choices.

Step-by-step explanation:

When a company reinstates a previously written-off receivable, the correct journal entry involves debiting the Accounts Receivable account and crediting the Allowance for Uncollectible Accounts. This action reverses the write-off and puts the receivable back on the company's books. The correct journal entry is:

• Accounts Receivable 1,000
• Allow. for Uncollectible Accts 1,000

The answer is option a, which corresponds with the proper accounting treatment for recovery of an account previously considered uncollectible. This entry effectively reverses the write-off and acknowledges the customer's intent to pay.