Madonna’s Music Store uses the direct write-off method in accounting for uncollectible accounts. 20-1 May 5 Wrote off $2,360 owed by Neal Dammond, who has no assets. July 18 Wrote off $1,255 owed by Maxine Mouse, who has made no payments in more than a year. Sept. 20 Reinstated the account of Neal Dammond, which had been written off on May 5, and received $2,360 cash in full settlement. 20-2 May 11 Reinstated the account of Maxine Mouse, which had been written off in the previous year, and received $1,255 cash in full settlement. Required: Record these transactions in general journal form.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
| 20-1 | |
| May 5 | Wrote off $2,360 owed by Neal Dammond, who has no assets. |
| July 18 | Wrote off $1,255 owed by Maxine Mouse, who has made no payments in more than a year. |
| Sept. 20 | Reinstated the account of Neal Dammond, which had been written off on May 5, and received $2,360 cash in full settlement. |
| 20-2 | |
| May 11 | Reinstated the account of Maxine Mouse, which had been written off in the previous year, and received $1,255 cash in full settlement. |
| Record these transactions in general journal form. |
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
