Question

Entries for Uncollectible Receivables, using Allowance Method Journalize the following transactions in the accounts of Sedona Interiors Company, a restaurant supply company that uses the allowance method of accounting for uncollectible receivables: May 1. Sold merchandise on account to Beijing Palace Co., $18,900. The cost of the merchandise sold was $11,200. Aug. 30. Received $8,000 from Beijing Palace Co. and wrote off the remainder owed on the sale of May 1 as uncollectible. Dec. 8. Reinstated the account of Beijing Palace Co. that had been written off on August 30 and received $10,900 cash in full payment. For a compound transaction, if an amount box does not require an entry, leave it blank.

Answer 1

Answer:

account receivables 18,900 debit

   sales revenues              18,900 credit

Cost of good sold    11,200 debit

    Inventory                      11,200 credit

Cash                                              8,000 debit

allowance for doubtful account 10,900 debit

     Account receivables                   18,900 credit

account receivables            10,900 debit

allowance for doubtful accounts   10,900 credit

cash          10,900 debit

  account receivables 10,900 credit

Explanation:

when we write-off we do not recognize an expense as we use the allowance method.

Now, when we recover the account we reverse the write-off method and then, record the collection as usual.