Question

Exercise 7-4 Direct write-off method LO P1 Dexter Company applies the direct write-off method in accounting for uncollectible accounts. March 11 Dexter determines that it cannot collect $45,000 of its accounts receivable from its customer Leer Company. 29 Leer Company unexpectedly pays its account in full to Dexter Company. Dexter records its recovery of this bad debt. Prepare journal entries to record the above selected transactions of Dexter.

Answer 1

Date Account Titles and Explanation Debit Credit

March 11 Bad debt Expenses $45,000

Account Receivables $45,000

(To record uncollectible accounts receivables)

Date Account Titles and Explanation Debit Credit

March 29 Account Receivables $45,000

Bad debt Expenses $45,000

(To record reversal of written off accounts receivables)

Date Account Titles and Explanation Debit Credit

March 29 Cash $45,000

Accounts Receivables $45,000

(To record receipt of cash from customers)