Ivanhoe Co. has accounts receivable of $740,700 and an allowance for doubtful accounts of $71,600. On January 24, 2021, the company learns that its receivable from Megan Gray is not collectible, and management authorizes a write-off of $6,300. On March 4, 2021, Ivanhoe Co. receives payment of $6,300 in full from Megan Gray.

Prepare the journal entries to record this transaction. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Question

Lawrence Faulkner

Business

7 September, 08:52

Ivanhoe Co. has accounts receivable of $740,700 and an allowance for doubtful accounts of $71,600. On January 24, 2021, the company learns that its receivable from Megan Gray is not collectible, and management authorizes a write-off of $6,300. On March 4, 2021, Ivanhoe Co. receives payment of $6,300 in full from Megan Gray.

Prepare the journal entries to record this transaction. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

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Ayana · Answer 1

January 24, 2021

Dr Allowance for doubtful accounts $6,300

Cr Accounts receivable $6,300

March 24, 2021

Dr Accounts receivable $6,300

Cr Allowance for doubtful accounts $6,300

Dr Cash $6,300

Cr Accounts receivable $6,300

Explanation:

On January 24, during the write-off, Ivanhoe Co. should debit accounts receivable and credit allowance for doubtful accounts in the amount of $6,300. This is to reduce the amount of accounts receivable along with its contra asset account. Upon recovery of the written off accounts receivable, Ivanhoe should set up first the reversal of previously written-off accounts. That is to debit accounts receivable and credit allowance for doubtful accounts on same amount of $6,300. Then, you record the collection of payment from Megan Gray. Debit cash and credit accounts receivable in the amount of $6,300.