Question

Entries for Uncollectible Accounts, using Direct Write-Off Method

Journalize the following transactions in the accounts of Canyon River Medical Co., a medical equipment company that uses the direct write-off method of accounting for uncollectible receivables:
Jan. 19 Sold merchandise on account to Dr. Kyle Norby, $46,800. The cost of goods sold was $25,300.
June 2 Received $10,800 from Dr. Kyle Norby and wrote off the remainder owed on the sale of January 19 as uncollectible.
Oct. 23 Reinstated the account of Dr. Kyle Norby that had been written off on June 2 and received $36,000 cash in full payment.

Answer 1

Answer and Explanation:

The journal entries are as follows:

On Jan. 19

Accounts receivables $46,800

To Sales $46,800

(Being the merchandise sold on account is recorded)

Cost of goods sold $25,300

To Inventory $25,300

(being the cost of merchandise is recorded)

On June 2

Cash $10,800

Bad debt expense $36,000

To Accounts receivables $46,800

(being cash received is recorded)

On Oct. 23

Accounts receivables $36,000

To Bad debt expense $36,000

(being written off is recorded)

Cash $36,000

To Accounts receivables $36,000

(being cash received is recorded)