Write off and Recovery Entries Prepare the appropriate journal entries for the following transactions for Warren Co. a. On February 1, the company determined that $6,800 in customer accounts is uncollectible; specifically, $900 for DeadBeat Co. and $5,900 for NoPay Co. Prepare the journal entry to write off those accounts. b. On June 5, the company unexpectedly received a $900 payment on a customer account, Dead Beat Company, that had previously been written off in part a. Prepare the entries necessary to reinstate the account and to record the cash received.
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.
Journal Entry :— It is an act of recording transactions in books of account when transaction occurred. It is the first step in recording transactions in books of account. General Rule :—1) Debit the receiver, credit the giver. 2) Debit what comes in, credit what goes out. 3) Debit all expenses & losses, credit all income & gains.
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