Question
In: Accounting
If a company writes off a Bad Debt Account at the end of a year and...
If a company writes off a Bad Debt Account at the end of a year and subsequently recovers the written off amount the following year, what should it do to record this transaction – explain?
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Expert Solution
If a company writes off a Bad Debt Account at the end of a year and subsequently recovers the written off amount the following year, it should first reinstate the written of account by debiting Accounts Receivable and crediting Allowance for Bad Debts. Then, it should record the collection on the account by debting Cash and crediting Accounts Receviable.
Assume that a company wrote off a bad debt account with balance of $1,000 at the end of a year and subsequently recoveres the written off amount of $1,000 in the following year.
The first entry to reinstate the written off account will be made as follows:
| Account Titles and Explanation | Debit | Credit |
| Accounts receivable | 1,000 | |
| Allowance for bad debts | 1,000 |
The second entry to record the collection on the written off account will be prepared as follows:
| Account Titles and Explanation | Debit | Credit |
| Cash | 1,000 | |
| Accounts receivable | 1,000 |
ekkarill92 answered 1 year agoRelated Solutions
The bank's provisions for bad and doubtful debt amount to $20 million. The bank writes off $18 million non-performing loans.
QUESTION 17The bank's provisions for bad and doubtful debt amount to $20
million. The bank writes off $18 million non-performing loans.As a result of the write off, the gross loans
___________________, the net loans _____________________ and bank's
equity _______________.A.decreases by $20 million; decreases by $18 million; decreases by
$2 million.B.does not change; decreases by $2 million; decreases by $2
million.C.decreases by $18 million; does not change; does not change.D.decreases by $18 million; decreases by $18 million; does not
change.E.decreases by...
Notes: •Direct write-off method: records bad debt expense only when an account is judged to be...
Notes:
•Direct write-off method: records bad debt expense only when
an account is judged to be worthless
•Allowance method: records bad debt expense by estimating
uncollectible accounts at the end of the accounting period
--On August 31, Target Inc. had an unadjusted credit balance of
$1,500 in its Allowance for Uncollectible Account. An analysis of
Target Inc.’s accounts receivables revealed the following: (Target
Inc. uses the aging of receivables method to estimate its bad debt
expense)
Age (days)
Amount ...
Entries for Bad Debt Expense under the Direct Write-Off and Allowance Method Casebolt Company wrote off...
Entries for Bad Debt Expense under the Direct Write-Off and
Allowance Method
Casebolt Company wrote off the following accounts receivable as
uncollectible for the first year of its operations ending December
31:
Customer
Amount
Shawn Brooke
$19,600
Eve Denton
18,300
Art Malloy
25,100
Cassie Yost
4,700
Total
67,700
a. Journalize the write-offs under the direct
write-off method. If an amount box does not require an entry, leave
it blank.
Bad Debt Expense
Accounts Receivable-Shawn
Brooke
Accounts Receivable-Eve
Denton
Accounts Receivable-Art...
Flyer Company has provided the following information prior to any year-end bad debt adjustment: Cash sales,...
Flyer Company has provided the following information prior to
any year-end bad debt adjustment: Cash sales, $168,000 Credit
sales, $468,000 Selling and administrative expenses, $128,000 Sales
returns and allowances, $48,000 Gross profit, $508,000 Accounts
receivable, $285,000 Sales discounts, $32,000 Allowance for
doubtful accounts credit balance, $3,000 Flyer prepares an aging of
accounts receivable and the result shows that 3% of accounts
receivable is estimated to be uncollectible. What is the balance in
the allowance for doubtful accounts after bad debt...
Ervin Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is...
Ervin Company uses the allowance method to account for uncollectible accounts receivable. Bad debt expense is established as a percentage of credit sales. For 2021, net credit sales totaled $5,400,000, and the estimated bad debt percentage is 1.50%. No previously written-off accounts receivable were reinstated during 2021. The allowance for uncollectible accounts had a credit balance of $51,000 at the beginning of 2021 and $44,500, after adjusting entries, at the end of 2021. Required: 1. What is bad debt expense for 2021...
Blue Skies Equipment Company uses the aging approach to estimate bad debt expense at the end...
Blue Skies Equipment Company uses the aging approach to estimate
bad debt expense at the end of each accounting year. Credit sales
occur frequently on terms n/60. The balance of each account
receivable is aged on the basis of three time periods as follows:
(1) not yet due, (2) up to one year past due, and (3) more than one
year past due. Experience has shown that for each age group, the
average loss rate on the amount of the...
Blue Skies Equipment Company uses the aging approach to estimate bad debt expense at the end...
Blue Skies Equipment Company uses the aging approach to estimate
bad debt expense at the end of each accounting year. Credit sales
occur frequently on terms n/60. The balance of each account
receivable is aged on the basis of three time periods as follows:
(1) not yet due, (2) up to one year past due, and (3) more than one
year past due. Experience has shown that for each age group, the
average loss rate on the amount of the...
Entries for Bad Debt Expense Under the Direct Write-Off and Allowance Methods Seaforth International wrote off...
Entries for Bad Debt Expense Under the Direct Write-Off and
Allowance Methods
Seaforth International wrote off the following accounts
receivable as uncollectible for the year ending December
31:
Customer
Amount
Kim Abel
$21,550
Lee Drake
33,925
Jenny Green
27,565
Mike Lamb
19,460
Total
$102,500
The company prepared the following aging schedule for its
accounts receivable on December 31:
Aging Class (Number
of Days Past Due)
Receivables Balance
on December 31
Estimated Percent of
Uncollectible Accounts
0-30 days
$715,000
1%
31-60...
Entries for Bad Debt Expense Under the Direct Write-Off and Allowance Methods Seaforth International wrote off...
Entries for Bad Debt Expense Under the Direct Write-Off and
Allowance Methods
Seaforth International wrote off the following accounts
receivable as uncollectible for the year ending December
31:
Customer
Amount
Kim Abel
$21,550
Lee Drake
33,925
Jenny Green
27,565
Mike Lamb
19,460
Total
$102,500
The company prepared the following aging schedule for its
accounts receivable on December 31:
Aging Class (Number
of Days Past Due)
Receivables Balance
on December 31
Estimated Percent of
Uncollectible Accounts
0-30 days
$715,000
1%
31-60...
Entries for Bad Debt Expense Under the Direct Write-Off and Allowance Methods Seaforth International wrote off...
Entries for Bad Debt Expense Under the Direct Write-Off and
Allowance Methods
Seaforth International wrote off the following accounts
receivable as uncollectible for the year ending December
31:
Customer
Amount
Kim Abel
$24,400
Lee Drake
34,000
Jenny Green
29,800
Mike Lamb
17,800
Total
$106,000
The company prepared the following aging schedule for its
accounts receivable on December 31:
Aging Class (Number
of Days Past Due)
Receivables Balance
on December 31
Estimated Percent of
Uncollectible Accounts
0-30 days
$735,000
1
%...
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