Question

Jada Company uses the allowance method to account for uncollectible receivables. On April ​2, Jada wrote off a $ 15,000 account receivable from customer J. Madas . On May ​12, Jada unexpectedly received full payment from Madas on the previously written off account. Jada records an adjusting entry for bad debts expense of $ 820 on May 31.

a. Journalize Jade's write-off of the uncollectible receivable.
b. Journalize jade's collection of the previously written off receivable.
c. Journalize Jade's adjustment for bad debt expense.

Answer 1

a. Debit Bad debt expense $15,000

Credit Allowance for doubtful debt $15,000

Debit Allowance for doubtful debt $15,000

Credit Accounts receivables $15,000

Being entries to write-off of the uncollectible receivable

b. Debit Cash account $15,000

Credit Bad debt expense $15,000

Being entries to recognize collection previously written off

c. Debit Bad debt expense $820

Credit Bad debt expense $820

Being entries to record adjustment for bad debt expense.

Step-by-step explanation:

When a company makes sales on account, debit accounts receivable and credit sales. Based on assessment, some or all of the receivables may be uncollectible.

To account for this, debit bad debit expense and credit allowance for doubtful debt. Should the debt become uncollectible (i.e go bad), debit allowance for doubtful debt and credit accounts receivable.

Where a debit that had previously been determined to have gone bad gets settled, debit cash and credit bad debt expense.