Question

Exercise 9-5 Writing off receivables LO P2

On January 1, Wei company begins the accounting period with a $46,000 credit balance in Allowance for Doubtful Accounts.

1. On February 1, the company determined that $10,000 in customer accounts was uncollectible; specifically, $2,500 for Oakley Co. and $7,500 for Brookes Co. Prepare the journal entry to write off those two accounts.
2. On June 5, the company unexpectedly received a $2,500 payment on a customer account, Oakley Company, that had previously been written off in part a. Prepare the entries to reinstate the account and record the cash received.

Answer 1

Solution:

Journal Entries - Wei company
Date	Particulars	Debit	Credit
1-Feb	Allowance for doubtful accounts Dr	$10,000.00
	To Accounts receivable - Oakley Co.		$2,500.00
	To Accounts receivable - Brookes Co.		$7,500.00
	(To write off receivables)
5-Jun	Accounts receivables - Oakley Co. Dr	$2,500.00
	To Allowance for doubtful accounts		$2,500.00
	(To reinstate receivables)
5-Jun	Cash Dr	$2,500.00
	To Accounts receivable - Oakley Co.		$2,500.00
	(To record collection from customer)