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9 July, 14:15

Gomez Corp. uses the allowance method to account for uncollectibles. On January 31, it wrote off an $1,100 account of a customer, C. Green. On March 9, it receives a $600 payment from Green. 1. Prepare the journal entry for January 31 2. Prepare the journal entries for March 9; assume no additional money is expected from Green.

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  1. 9 July, 14:19
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    1.

    January 31

    Dr. Allowance for uncollectible accounts $1,100

    Cr. Account Receivable $1,100

    2.

    March 9

    Dr. Cash $600

    Cr. Account Receivable $600

    Dr. Account Receivable $600

    Cr. Allowance for uncollectible accounts $600

    Explanation:

    A receivable is written off on January, 31, it reduces the account receivable balance and record this amount in Allowance for uncollectible account to adjust the value in the expense for the period by making adjusting entry later on.

    When the amount recovered from the written off receivable the entry reversed by passing through the receivable account to again settle that receivable amount in the Allowance for uncollectible account. It effect will be adjusted in the period end adjusting entries.
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