Q2TI - Horngren'S Financial And Managerial Accounting

Question

Williams Company uses the direct write-off method to account for uncollectible receivables. On July 18, Williams wrote off a

$6,800 account receivable from customer W. Jennings. On August 24, Williams unexpectedly received full payment from Jennings

on the previously written off account.

7. Journalize Williams’s write-off on the uncollectible receivable.

8. Journalize Williams’s collection of the previously written off receivable

Step-by-Step Solution

Answer

(7) Bad debts expense account will be debited and accounts receivable-W.Jennings will be credited by $6,800, respectively. 

(8) Firstly, accounts receivable-W.Jennings will be debited and bas debt expense will be credited by $6,800, respectively. Then, cash account will be debited and accounts receivable-W.Jennings will be credited by $6,800, respectively.

Step 1: Definition of bad debts

Bad debt is the amount that is not received from the customers.

Step 2: Journal entry for uncollectible receivable

Date	Particulars	Debit	Credit
July 18	Bad Debts Expense	$6,800
	Accounts Receivable- W. Jennings		$6,800
	(Wrote off an uncollectible account.)

Step 3: Journal entry for collection of previously written off receivable

Date	Particulars	Debit	Credit
August 24	Accounts Receivable- W. Jennings	$6,800
	Bad Debts Expense		$6,800
	(Reinstated previously written off account)
August 24	Cash	$6,800
	Accounts Receivable- W. Jennings		$6,800
	(Collected cash on account)