Question

At the end of 2019, Wildhorse Co. has accounts receivable of $731,300 and an allowance for doubtful accounts of $65,400. On January 24, 2020, the company learns that its receivable from Megan Gray is not collectible, and management authorizes a write-off of $6,900. On March 4, 2020, Wildhorse Co. receives payment of $6,900 in full from Megan Gray. Prepare the journal entries to record this transaction.

Answer 1

Answer and Explanation:

The journal entry to record the transaction is shown below:

Accounts receivable $6,900

To allowance for doubtful accounts $6,900

(Being reversing the write off is recorded)

Here account receivable is debited as it increased the assets and credited the allowance as it decreased the assets

Cash $6,900

To Accounts receivable $6,900

(Being cash collection from write off account is recorded)

Here the cash is debited as it decreased the assets and credited the account receivable as it decreased the assets