Question

Prior to recording the following, Elite Electronics, Incorporated, had a credit balance of $2,000 in its Allowance for Doubtful Accounts.Prepare journal entries for each transaction.a. On August 31, 2010, a customer balance for $300 from a prior year was determined to be uncollectible and was written off.b. On December 15, 2010, the customer balance for $300 written off on August 31, 2010, was collected in full.

Answer 1

Upon write off of $300 as uncollectible debt,the following accounting entries are required

Dr Allowance for doubtful accounts $300

Cr Accounts receivable $300

Being posting of uncollectible debt

Upon receipt of the debt already written off,the debts needs be restated by reversing the original entries:

Dr Accounts receivable $300

Cr Allowance for doubtful debt $300'

Restatement of earlier debt written off

The following entries are required for cash receipt:

Dr Cash $300

Cr Accounts receivable $300

being collection of cash for accounts receivable

Step-by-step explanation:

Initially write off of debt means additional expense of $300,hence allowance for doubtful accounts is debited and accounts receivable is credited.

For receipt of cash, an inflow of cash means an increase in asset,hence cash account is debited and accounts receivable credited.

Answer 2

Elite Electronics, Incorporated

JOURNAL ENTRY :

Aug 31

Dr Allowance for Doubtful Accounts a/c 300

Cr Account Receivable. a/c 300

( To record write off Account Receivable)

Dec 15

Dr Account Receivable a/c 300

Cr Allowance for Doubtful Accounts 300

( To record reinstate the accounts receivable)

Dec 15

DR Cash a/c 300

CR Account Receivable a/c 300

( To record Payment received)