Question

Journalize the following transactions, using the direct write-off method of accounting for uncollectible receivables: Mar. 17. Received $275 from Shawn McNeely and wrote off the remainder owed of $1,000 as uncollectible. If an amount box does not require an entry, leave it blank.

Answer 1

Answer:

Journal Entry

Date                     Particulars                     Debit            Credit

Mar. 17                       Cash                          $275          

                          Bad Debts                     $ 1000

                          Accounts Receivable( Shawn McNeely) $1275

As cash is received and also bad debts are written off from the same person a combined entry can be made for the accounts receivable.

When direct write off method is used the allowance for uncollectibles is not created. The bad debts are directly written off against the accounts receivable.

Answer 2

Answer:

Debit Cash account $275

Debit Bad debt expense $1,000

Credit Accounts receivable $1,275

Being entries to record cash and bad debt from receivables due.

Explanation:

When a company makes sales on account,the entries required are

Debit accounts receivable and

Credit sales.

Based on assessment, some or all of the receivables may be uncollectible.  

Using the direct method to account for receivables that may be uncollectible, the entries required are

Debit Bad debt expense

Credit Accounts receivable

When cash is collected , the debit entry is posted to the cash account.

Accounts receivable before adjustment = $1,000 + $275

= $1,275