**Title: Preparing Entries for Collection of Customer Account Write-Off****Scenario: Safer Co. Accounts Receivable**At the end of 2021, Safer Co. reported accounts receivable totaling $700,000 with an allowance for doubtful accounts of $25,000. However, on January 24, 2022, it was determined that a receivable from Madonna Inc. amounting to $4,300 could not be collected. As a result, management authorized a write-off for this amount. Subsequently, on March 4, 2022, Safer Co. received the full payment of $4,300 from Madonna Inc.**Task: Journal Entries Requirement**1. **Write-Off Authorization Entry:** - Prepare the necessary journal entries to record the $4,300 write-off after it was deemed uncollectible.2. **Collection of Previously Written-Off Accounts Entry:** - Record the journal entries when the $4,300 payment is received in full from Madonna Inc.3. **Percentage-of-Receivables Method:** - Prepare the entry using the percentage-of-receivables method to address the write-off scenario.**Objective:**This exercise aims to enhance understanding of handling uncollectible accounts and preparing corresponding journal entries, applying the percentage-of-receivables method in financial accounting contexts.

Allowance for doubtful accounts - Allowance for doubtful accounts is the provision made by the company for the accounts which the company finds doubtful to be receivable in the future. Instead of getting it at once, the company makes a provision at a predetermined percentage to determine provision. If the company recovers the written accounts then the allowance account will be reversed.1. Journal Entries -

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Prepare entries for collection of customer account write-off. BE8.5 (LO 2), AP At the end of 2021, Safer Co. has accounts receivable of $700,000 and an allowance for doubtful accounts of $25,000. On January 24, 2022, it is learned that the company's receivable from Madonna Inc. is not collectible and therefore management authorizes a write-off of $4.300. On March 4, 2022, Safer Co. receives payment of $4.300 in full from Madonna Inc. Prepare the journal entries to record this transaction. Prepare entry using percentage-of-receivables method.

Prepare entries for collection of customer account write-off. BE8.5 (LO 2), AP At the end of 2021, Safer Co. has accounts receivable of $700,000 and an allowance for doubtful accounts of $25,000. On January 24, 2022, it is learned that the company's receivable from Madonna Inc. is not collectible and therefore management authorizes a write-off of $4.300. On March 4, 2022, Safer Co. receives payment of $4.300 in full from Madonna Inc. Prepare the journal entries to record this transaction. Prepare entry using percentage-of-receivables method.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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