In: Accounting
Allowance Method versus Direct Write-Off Method On April 12, Maddox Company, declared a $40,000 account receivable from the Ward Company as uncollectible and wrote off the account. On December 5, Maddox received a $28,000 payment on the account from Ward.
a. Assume that Maddox uses the allowance method of handling
credit losses. Prepare the journal entries to record the write-off
and the subsequent recovery of Ward's account.<
b. Assume that Maddox uses the direct write-off method of handling
credit losses. Prepare the journal entries to record the write-off
and the subsequent recovery of Ward's account.
c. Assume that the payment from Ward arrives on January 18, rather
than on December 5 of the current year. (1) Prepare the journal
entries to record the write-off and subsequent recovery of Ward's
account under the allowance method. (2) Prepare the journal entries
to record the write-off and subsequent recovery of Ward's account
under the direct write-off method.
a.
General Journal | |||
---|---|---|---|
Date | Description | Debit | Credit |
April.12 | |||
To write off the Ward Company account. | |||
Dec.5 | |||
To reinstate the Ward Company account. | |||
Dec.5 | |||
To record remittance. |
b.
General Journal | |||
---|---|---|---|
Date | Description | Debit | Credit |
April 12 | |||
To write off the Ward Company account. | |||
Dec.5 | |||
To reinstate the Ward Company account. | |||
Dec.5 | |||
To record remittance. |
c.Part 1
General Journal | |||
---|---|---|---|
Date | Description | Debit | Credit |
April 12 | |||
To write off the Ward Company account. | |||
Jan.18 | |||
To reinstate the Ward Company account. | |||
Jan.18 | |||
To record remittance. |
c.Part 2
General Journal | |||
---|---|---|---|
Date | Description | Debit | Credit |
April 12 | |||
To write off the Ward Company account. | |||
Jan.18 | |||
To reinstate the Ward Company account. | |||
Jan.18 | |||
To record remittance. |