Question

Dexter Company uses the direct write-off method. March 11 Dexter determines that it cannot collect $45,000 of its accounts receivable from Leer Co. 29 Leer Co. unexpectedly pays its account in full to Dexter Company. Dexter records its recovery of this bad debt. Prepare journal entries to record the above transactions.

Answer 1

Answer:

The Journal entries are as follows:

(i) On March 11,

Bad debt expense A/c  Dr. $45,000

To accounts receivable                     $45,000

(To record uncollectible accounts receivable)

(ii) On March 29,

Accounts receivable A/c   Dr. $45,000

To Bad debt expense A/c                      $45,000

(To record reversal of written off accounts receivable)

(iii) On March 29,

Cash A/c   Dr. $45,000

To accounts receivable   $45,000

(To record receipt of cash from customer)