Question

If Modern Company received $3,650 from Connor Young Company on March 12 for the total amount of an account that had been written off on March 1, the entry to record the cash receipt after the account has been reinstated under the direct write-off method a. includes a credit to Bad Debt Expense of $3,650. b. includes a debit to Allowance for Doubtful Accounts of $3,650. c. includes a credit to Cash of $3,650. d. is the same as it would be under the allowance method.

Answer 1

Answer: the correct  answer is a. includes a credit to Bad Debt Expense of $3,650.

Explanation: the Debt was not going to be paid but then the company received the money so it corresponds the credit to Bad Debt Expense of $3,650.