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

Answer: OPTION " A "  Accounts Receivable--Duck Co. 1,200 Bad Debts Expense 1,200 Cash 1,200 Accounts Receivable--Duck Co. 1,200

Explanation:

To record the bad debt recovery transaction debit Account receivable and credit bad debts expense account.

Date	General journal	Debit	Credit
Feb-17	Account Receivable- Duck Co	$1200
	Bad Debts expense		$1200

To record the bad debt recovery transaction as income Debit Cash A/c and credit Account receivable account.

Date	General journal	Debit	Credit
Feb-17	Cash	$1200
	Account Receivable- Duck Co		$1200