On January 1, Wei company begins the accounting period with a $48,000 credit balance in Allowance for Doubtful Accounts. a. On February 1, the company determined that $10,400 in customer accounts was uncollectible; specifically, $2,700 for Oakley Co. and $7,700 for Brookes Co. Prepare the journal entry to write off those two accounts. b. On June 5, the company unexpectedly received a $2,700 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.

Question

Freddy

Business

2 November, 07:45

On January 1, Wei company begins the accounting period with a $48,000 credit balance in Allowance for Doubtful Accounts. a. On February 1, the company determined that $10,400 in customer accounts was uncollectible; specifically, $2,700 for Oakley Co. and $7,700 for Brookes Co. Prepare the journal entry to write off those two accounts. b. On June 5, the company unexpectedly received a $2,700 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.

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Answers (2)

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Fernando Boone · Answer 1

a. journal entry to write off those two accounts

Bad Debts $10,400 (debit)

Oakley Co $2,700 (credit)

Brookes Co $7,700 (credit)

Being write off of Oakley Co and Brookes Co

b. entries to reinstate the account and record the cash received

Oakley Co $2,700 (debit)

Bad Debts $2,700 (credit)

Being reinstatement of Oakley Co account

Cash $2,700 (debit)

Oakley Co $2,700 (credit)

Being record of the cash received

Explanation:

a. journal entry to write off those two accounts

Recognize a Bad Debts expense and de-recognize the assets - Trade Receivables

b. entries to reinstate the account and record the cash received

Recognize the assets-Account Receivable and de-recognize the Bad Debt expense

Also, Recognize the Assets of Cash and De-recognize the Trade Receivables as a results of receipt of payment.

Claudia Merritt · Answer 2

a. Debit Allowance for doubtful debt $2,700

Debit Allowance for doubtful debt $7,700

Credit Account receivable $10,400

Being entries to write off uncollectible debts due from Oakley Co. and Brookes Co.

b. To reinstate the amount due from Oakley Co previously written off

Debit Accounts receivable $2,700

Credit Bad debt expense $2,700

Being entries to reinstate receivables due from Oakley Co.

Furthermore,

Debit Cash account $2,700

Credit Accounts receivable $2,700

Being entries to record cash received.

Explanation:

When a company makes sales on account, debit accounts receivable and credit sales. Based on assessment, some or all of the receivables may be uncollectible.

To account for this, debit bad debit expense and credit allowance for doubtful debt. Should the debt become uncollectible (i. e go bad), debit allowance for doubtful debt and credit accounts receivable.

Where a debit that had previously been determined to have gone bad gets settled, debit cash and credit bad debts.