Question

This company uses the Allowance Method for accounting for bad debts: Use the below journal to prepare these transactions April 3rd - Wrote off $3,200 owed by Jane Smith who filed bankruptcy June 5th - Wrote off $4,500 owed by David Duke who has made no payments in a year Dec. 15th - David Duke came in and paid $600 on the account that was written off on June 5th. of Paragraph III

Answer 1

Solution:

Journal Entries
Date	Particulars	Debit	Credit
3-Apr	Allowance for doubtful accounts Dr	$3,200.00
	To Accounts receivables		$3,200.00
	(Being bad debts written off)
5-Jun	Allowance for doubtful accounts Dr	$4,500.00
	To Accounts receivables		$4,500.00
	(Being bad debts written off)
15-Dec	Accounts receivables Dr	$600.00
	To Allowance for doubtful accounts		$600.00
	(To reinstate receivables previously written off)
15-Dec	Cash Dr	$600.00
	To Accounts receivables		$600.00
	(To record collection from customer)