(LOBJ. 4, 5) Journalizing transactions using the direct-write off system and reporting receivables on the balance sheet [10—20 min]
Top Performance Cell Phones sold $18,000 of merchandise to Andrew Trucking Company on account. Andrew fell on hard times and paid only $4,000 of the account receivable. After repeated attempts to collect, Top Performance finally wrote off its accounts receivable from Andrew. Six months Later Top Performance received Andrew’s check for $14,000 with a note apologizing for the late payment.
Requirements
1. Journalize for Top Performance:
a. Sale on account, $18,000. (Ignore cost of goods sold.)
b. Collection of $4,000 on account
c. Write-off of the remaining portion of Andrew’s account receivable. Top Performance uses the allowance method for uncollectibles.
d. Reinstatement of Andrew’s account receivable
e. Collection in full from Andrew, $14,000
2. Show how Top Performance would report receivables on its balance sheet after all entries have been posted.
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