Question

Apollo Company uses the direct write-off method of recording credit losses. Apollo Company wrote off the $3,200 account of Duck Co. in October 2016. In February 2017, Apollo Company received a final $1,200 payment from Duck’s trustee in bankruptcy.

Apollo should make the following entry or entries to record the payment:

Select one:

A.

Accounts Receivable--Duck Co.

1,200

Bad Debts Expense

1,200

Cash

1,200

Accounts Receivable--Duck Co.

1,200

B.

Allowance for Doubtful Accounts

1,200

Bad Debts Expense

1,200

C.

Accounts Receivable--Duck Co.

1,200

Allowance for Doubtful Accounts

1,200

D.

Cash

1,200

Allowance for Doubtful Accounts

1,200

Answer 1

Correct option is A.

Account Receivable - Duck co. ..... Debit $1200

Bad debts Expense .... Credit $1200

Cash Account .... Debit $1200

Account Receivable - Duck co. ..... Credit $1200

Explanation:

Apollo company write off total amount of due from Dock co. in the month of October and Debited Bad debts expense Account and credited Account receivable - Duck co. and now when money is received then as per direct methods first of all Account receivable will be debited and bad debts will be credited then Cash will be debited and Account receivable will be credited.