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Mitchell Manufacturing determines on February 1 that it cannot collect $45,000 of its accounts receivable from...

Mitchell Manufacturing determines on February 1 that it cannot collect $45,000 of its accounts receivable from its customer P Valves. Apply the direct write off method to record the bad debt as of February 1. On November 1, P Valves contacts Mitchell Manufacturing to let them know that the company's financial situation has improved greatly and they wish to pay off the $45,000 accounts receivable and resume doing business with Mitchell. They include a check for $45,000.

Record the entry that Mitchell Manufacturing would make to record recovery of this bad debt.

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Answer #1

Journal entry

Date account and explanation Debit Credit
Feb 1 Bad debt expense 45000
Account receivable 45000
(To record write off)
Nov 1 Account receivable 45000
Bad debt recovery 45000
(To record reinstate)
Cash 45000
Account receivable 45000
(To record collection)
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