Answer: Please refer to Explanation.
Explanation:
January 2
DR Accounts Receivable - Terry Richman $2,000
CR Sales $2,000
(To record sale of goods to Terry Richman on Account)
April 15
DR Cash $600
CR Accounts Receivable - Terry Richman $600
(To record cash received from Terry Richman)
August 21
DR Allowance for Doubtful Debt $1,400
CR Accounts Receivable - Terry Richman $1,400
(To record write off of Terry Richman Account)
October 5
DR Accounts Receivable - Terry Richman $300
CR Allowance for Doubtful Debt $300
October 5
DR Cash $300
CR Accounts Receivable $300
(To record Cash Received from Terry Richman)
Workings and Notes.
Terry Richman paid $600 out of their $2,000 debt before declaring bankruptcy.
= 2,000 - 600
= $1,400.
This is why $1,400 was the written off figure.
When an Receivables account is written off, it is debited to the Allowance for Doubtful Debt Account.
When money is unexpectedly received after a write off, the amount first has to be retrieved from the Allowance for Doubtful Debt and taken back to the Accounts Receivables and then it can be recorded as Cash received.
