2) Prepare the journal entry under the direct write-off method that ABC company would record when it determines that $500 cannot be collected from its customer DEF from a previous sale on account: DR: Bad Debt Expense $500 CR: Accounts Receivable $500 3) After being written off inn question 2, DEF company winds up partially paying ABC $250 that it previously owed, before officially going out of business. Please prepare the necessary journal entries to reverse the write off for the appropriate amount, and to record the receipt of cash: DR: CR: DR: CR: PLEASE DO NOT ANSWER THE FIRST QUESTION. KIND THANKS
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
2) Prepare the
DR:
CR:
3) After being written off inn question 2, DEF company winds up partially paying ABC $250 that it previously owed, before officially going out of business. Please prepare the necessary journal entries to reverse the write off for the appropriate amount, and to record the receipt of cash:
DR:
CR:
DR:
CR:
PLEASE DO NOT ANSWER THE FIRST QUESTION. KIND THANKS
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