Question

Gomez Corp. uses the allowance method to account for uncollectibles. On January 31, it wrote off an $1,600 account of a customer, C. Green. On March 9, it receives a $1,100 payment from Green.

1. Prepare the journal entry or entries for January 31
2. Prepare the journal entry or entries for March 9; assume no additional money is expected from Green.

Answer 1

Answer: Please see explanation for answers

Step-by-step explanation:

1. Journal entry to record bad debt on January 31st

Date Account Titles and Explanation Debit Credit

Jan. 31st Allowance for doubtful account $1,600

Account receivables ( Customer C. Green) $1.600

2. Journal entry to record recovery of bad debt on March 9

A) To reinstate Amount previously written off

Date Account Titles and Explanation Debit Credit

March 9 Account receivables ( Customer C. Green) $1,100

Allowance for doubtful account $1,100

B) To record payment of account

Date Account Titles and Explanation Debit Credit

March 9 Cash $1,100

Account receivables( Customer C. Green) $1,100