Question 1: Journalize the transaction as follow under both direct write-off method and allowance method. 1. Wrote off account of Jenny Co., $7,000. 2. Received $2,000 as partial payment on the $5,000 account of Park Co. Wrote off the remaining balance as uncollectible. 3. Received the amount of money that had been written off from Park Co.
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.
Question 1:
Journalize the transaction as follow under both direct write-off method and allowance method.
1. Wrote off account of Jenny Co., $7,000.
2. Received $2,000 as partial payment on the $5,000 account of Park Co. Wrote off the remaining balance as uncollectible. 3. Received the amount of money that had been written off from Park Co.
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