Question

During August2018​,TexitCompany recorded the​ following:bulletSales of $ 113 comma 400​($ 99 comma 000on​ account; $ 14 comma 400for​ cash). Ignore Cost of Goods Sold.bulletCollections on​ account, $ 87 comma 400.bullet​Write-offs of uncollectible​ receivables, $ 1 comma 760.bulletRecovery of receivable previously written​ off, $ 300.Requirements1.Journalize Texit​'stransactions during August2018​,assuming Texituses the direct​ write-off method.2.Journalize Texit​'stransactions during August2018​,assuming Texituses the allowance m

Answer 1

Answer:

Sales of $113,400​ ($99,000 on​ account)

Collections on​ account, $87,400.

​Write-offs of uncollectible​ receivables, $1,760.

Recovery of receivable previously written​ off, $300.

Dr Accounts receivable 99,000

Dr Cash 14,400

    Cr Sales revenue 113,400

Dr Cash 87,400

    Cr Accounts receivable 87,400

Since we are assuming that the company uses the allowance method, we must first record bad debt expense:

Dr Bad debt 1,760

    Cr Allowance for uncollectible accounts 1,760

Then when we write off the account:

Dr Allowance for uncollectible accounts 1,760

    Cr Accounts receivable 1,760

To reverse a write off for recording the collection of an account:

Dr Accounts receivable 300

    Cr Allowance for doubtful accounts 300

Dr Cash 300

    Cr Accounts receivable 300