Question

When an account receivable that has previously been written off is later paid, under the allowance...

When an account receivable that has previously been written off is later paid, under the allowance method the correct accounting is to

A.Dr. A/R
Cr. Allowance for Doubtful Accounts
Dr. Cash
Cr. A/R

B.Dr. A/R
Cr. Cash
Dr. A/R
Cr. Allowance for Doubtful Accounts

C.Dr. Cash
Cr. A/R

D.Dr. A/R
Cr. Allowance for Doubtful Accounts

Bailey Inc.'s books revealed the following data for 2020 after all adjustments were made:

Cash sales $825,000
Sales returns (on credit sales) 35,000
Allowance for doubtful accounts (credit balance) 3,800
Credit sales 575,000
Accounts receivable 168,000

Bailey estimates bad debt expense based on 2% of net credit sales.
The net carrying value of accounts receivable before the bad debt expense is recognized is

$156,500.

$164,200.

$168,000.

$171,800.

Business   Accounting   
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Answer #1

Answer: Option A

Journal Entry for an account receivable that has previously been written off is later paid.

General Journal Debit Credit
Account Receivable XXX
Allowance for Doubtful Accounts XXX
(To record Reinstatement of Account )
Cash XXX
Account Receivable XXX
(To record Payment Received)

2) Option $168000

Given that the Balance of Account receivable is $168000

Bad Debts Expense is 2% of Net Sales

The carrying Amount of Account receivable before bad Debt adjustment remains $168000

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