Entries for Uncollectible Accounts, using Direct Write-Off Method
Journalize the following transactions in the accounts of Canyon River Medical Co., a medical equipment company that uses the direct write-off method of accounting for uncollectible receivables:
Jan. 19 | Sold merchandise on account to Dr. Kyle Norby, $51,200. The cost of goods sold was $27,600. |
June 2 | Received $13,800 from Dr. Kyle Norby and wrote off the remainder owed on the sale of January 19 as uncollectible. |
Oct. 23 | Reinstated the account of Dr. Kyle Norby that had been written off on June 2 and received $37,400 cash in full payment. |
If an amount box does not require an entry, leave it blank.
Jan. 19-sale | |||
Jan. 19-cost | |||
June 2 | |||
Oct. 23-reinstate | |||
Oct. 23-collection | |||
Solution:
Date | Account Titles and Explanation | Debit | Credit |
Jan. 19 | Account Receivable | $ 51,200 | |
Sales Revenue | $ 51,200 | ||
(To record sales made on account) | |||
Jan. 19 | Cost Of Goods Sold | $ 27,600 | |
Inventory | $ 27,600 | ||
( To record Cost of goods sold) | |||
June. 2 | Cash | $ 13,800 | |
Bad Debts Expense | $ 37,400 | ||
Account Receivable | $ 51,200 | ||
[ To record collection and bad debts expense] | |||
Oct. 23 | Accounts Receivables | $ 37,400 | |
Bad Debts Expense | $ 37,400 | ||
(To record balance of accounts receivable is reinstate) | |||
Oct. 23 | Cash | $ 37,400 | |
Accounts Receivables | $ 37,400 | ||
(To record payment received) |
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