Answer:
- Prepare the journal entry to write off the uncollectible account.
Dr Bad Debt Expense $ 13,000
Cr Allowance for Uncollectible Accounts $ 13,000
- Prepare the journal entry(ies) necessary to restore the account and record the cash collection.
Dr Accounts receivable $ 5,000
Cr Allowance for Uncollectible Accounts $ 5,000
Dr Cash $ 5,000
Cr Accounts receivable $ 5,000
Explanation:
- (a). Assume the current balance in Allowance for Doubtful Accounts is an $8,000 debit.
- (c) Of the above accounts, $5,000 is determined to be specifically uncollectible.
Dr Bad Debt Expense $ 13,000
Cr Allowance for Uncollectible Accounts $ 13,000
Because the company already has a DEBIT balance ($8,000) in the Allowance for Doubtful Accounts it's necessary to register an entry that COMPENSATE ($13,000) the existing value and reflect the value estimated as bad debts ($5,000).
- (d) The company collects $5,000 subsequently on a specific account that had previously been determined to be uncollectible in
Dr Accounts receivable $ 5,000
Cr Allowance for Uncollectible Accounts $ 5,000
- (c). Prepare the journal entry(ies) necessary to restore the account and record the cash collection.
Dr Cash $ 5,000
Cr Accounts receivable $ 5,000
