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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

Under the allowance method, what journal entries are made if an account is collected that was previously written off?

To determine

Show the journal entries that are recorded, if an account is collected which was written off previously, under the allowance method.

Explanation

Allowance method:

It is a method for accounting bad debt expense, where amount of uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Write-off:

Write-off refers to deduction of a certain amount from accounts receivable, when it becomes uncollectible.

There are two journal entries are recorded when an account was previously written off is subsequently collected:

DateParticularsPost. RefDebit ($)Credit ($)
1.Accounts Receivable  XXX 
  Allowance for Doubtful Accounts  XXX
 (To record reinstated account receivable)   
     
 2...

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