Question

Using the direct write-off method of accounting for uncollectible receivables. Feb. 20 Received $1,000 from Andrew Warren and wrote off the remainder owed of $4,000 as uncollectible. May 10 Reinstated the account of Andrew Warren and received $4,000 cash in full payment.

Required:Journalize the above transactions. Refer to the Chart of Accounts for exact wording of account titles.

Answer 1

Given:

Feb. 20: Received $1,000 from Andrew Warren and wrote off the remainder owed of $4,000 as uncollectible.

May 10: Reinstated the account of Andrew Warren and received $4,000 cash in full payment

Required: Journalize using direct write-off method of accounting for uncollectible receivables.

Journalize:

February 20

Bad Debt Expense Dr.: 4000(debit)

Cash Dr.: 1000(debit)

Accounts Receivable Cr.: (4000+1000) 5000(credit)

_______________________

May 10

Accounts Receivable Dr.: 4000(debit)

Bad Debt Expense Cr.: 4000(credit)

Cash Dr.: 4000(debit)

Accounts Receivable Cr. 4000(credit)

Answer 2

Entries for the journal are as follows

Step-by-step explanation:

February 20

As we have received the cash from Andrew we will debit the cash and we know that we cant recover the remaining amount, we will debit the bad debt as expenses are of debit nature and will credit the account receivable as it is No more our receivable

Entry: Cash $1000 (Debit)

Bad debt $4000 (Debit)

Account receivable $5000(Credit)

May 10

Now we have received the payment from the Andrew that we wrote off on feb 20 Now we have to somehow reverse the entries as follows

Entry: account receivable $4000(Debit)

Bad debt expense $4000(credit)

Cash $4000(debit)

Account receivable $4000 (credit)