Journalizing transactions using the direct-write off method and reporting receivables on the balance sheet [10-20 min]
High Performance Cell Phones sold $23,000 of merchandise to Anthony Trucking Company on account. Anthony fell on hard times and paid only $8,000 of the account receivable. After repeated attempts to collect, High Performance finally wrote off its accounts receivable from Anthony. Six months later High Performance received Anthony’s check for $15,000 with a note apologizing for the late payment.
Requirements
1. Journalize for High Performance:
a. Sale on account, $23,000. (Ignore cost of goods sold.)
b. Collection of $8,000 on account.
c. Write-off of the remaining portion of Anthony’s account receivable. High Performance uses the direct write-off method for uncollectibles.
d. Reinstatement of Anthony’s account receivable.
e. Collection in full from Anthony, $15,000.
2. Show how High Performance would report receivables on its balance sheet after all entries have been posted.
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