Question

On December 31, 2015, management had determined that it would not be able to collect the $1,200 owed to it by its customer Acme, Inc. On September 15, 2016, a check in the amount of $600 was unexpectedly received from Acme. Management does not expect any future collections from Acme. (The company uses the direct write-off method to account for its uncollectible accounts.) Prepare the necessary journal entry to record the events by selecting the account names and dollar amounts from the drop-down menus. (Use a compound entry instead of preparing two separate journal entries.)

Answer 1

Answer: Please see explanation column

Step-by-step explanation:

Journal to record uncollectible accounts using the direct write-off method

Date Accounts Debit Credit

Dec 31, 2015 Bad debts expense $1,200

Accounts Receivable -Acme Inc $1,200

Compound Journal entry to record recovery using Direct write off method for the events

Date Accounts Debit Credit

Sep 15, 2016 Acct Receivable —Acme, Inc. $600

Bad Debt Expense $600

Cash $600

Account Receivable—Acme, Inc. $600