Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses allowance method of handling credit losses.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 8, Problem 10AE

a.

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses allowance method of handling credit losses.

a.

Expert Solution

Explanation of Solution

Allowance method:

It is a method for accounting bad debt expense, where uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under allowance method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Allowance for doubtful accounts	1,800
	Accounts receivable – Company A		1,800
	(To write off the Company G’s account)

Table (1)

Allowance for doubtful accounts is a contra asset, and it is decreased. Therefore, debit allowance for doubtful accounts for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable – Company G account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Accounts receivable – Company A	800
	Allowance for doubtful accounts		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (2)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Allowance for doubtful accounts is a contra asset, and it is increased. Therefore, credit allowance for doubtful accounts for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Cash	800
	Accounts receivable – Company A		800
	(To record the collection of cash on account.)

Table (3)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

b.

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses direct write off method of handling credit losses.

b.

Expert Solution

Explanation of Solution

Direct write-off method:

Under this method, firms report the estimated uncollectible amount to Bad debts expense. Under the direct write-off method, only the actual losses are recorded as bad debt expense. The gross amount of the accounts receivable is only recorded in the financial statements.

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under direct write off method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Bad Debts Expense	1,800
	Accounts Receivable		1,800
	(To write off the Company G’s account)

Table (4)

Bad debts expense is a component of stockholders’ equity, and it is decreased. Therefore, debit bad debts expense account for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Accounts Receivable	800
	Bad Debts Expense		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (5)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Bad debt expense is a component of stockholders’ equity, and it is increased. Therefore, credit bad debts expense account for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Cash	800
	Accounts receivable – Company A		800
	(To record the collection of cash on account.)

Table (6)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

c.(1)

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses allowance method of handling credit losses.

c.(1)

Expert Solution

Explanation of Solution

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under allowance method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Allowance for doubtful accounts	1,800
	Accounts receivable – Company A		1,800
	(To write off the Company A’s account)

Table (7)

Allowance for doubtful accounts is a contra asset, and it is decreased. Therefore, debit allowance for doubtful accounts for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable – Company A account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Accounts receivable – Company A	800
	Allowance for doubtful accounts		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (8)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Allowance for doubtful accounts is a contra asset, and it is increased. Therefore, credit allowance for doubtful accounts for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Cash	800
	Accounts receivable – Company G		800
	(To record the collection of cash on account.)

Table (9)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

c.(2)

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses direct write off method of handling credit losses.

c.(2)

Expert Solution

Explanation of Solution

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under direct write off method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Bad Debts Expense	1,800
	Accounts Receivable		1,800
	(To write off the Company A’s account)

Table (10)

Bad debts expense is a component of stockholders’ equity, and it is decreased. Therefore, debit bad debts expense account for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Accounts Receivable	800
	Bad Debts Expense		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (11)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Bad debts expense is a component of stockholders’ equity, and it is increased. Therefore, credit bad debts expense account for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Cash	800
	Accounts receivable – Company A		800
	(To record the collection of cash on account.)

Table (12)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

On May 31, 2026, Oriole Company paid $3,290,000 to acquire all of the common stock of Pharoah Corporation, which became a division of Oriole. Pharoah reported the following balance sheet at the time of the acquisition: Current assets $846,000 Current liabilities $564,000 Noncurrent assets 2,538,000 Long-term liabilities 470,000 Stockholder's equity 2,350,000 Total assets $3,384,000 Total liabilities and stockholder's equity $3,384,000 It was determined at the date of the purchase that the fair value of the identifiable net assets of Pharoah was $2,914,000. At December 31, 2026, Pharoah reports the following balance sheet information: Current assets $752,000 Noncurrent assets (including goodwill recognized in purchase) 2,256,000 Current liabilities (658,000) Long-term liabilities (470,000) Net assets $1,880,000 It is determined that the fair value of the Pharoah division is $2,068,000.

The following transactions involving intangible assets of Oriole Corporation occurred on or near December 31, 2025. 1.) Oriole paid Grand Company $520,000 for the exclusive right to market a particular product, using the Grand name and logo in promotional material. The franchise runs for as long as Oriole is in business. 2.) Oriole spent $654,000 developing a new manufacturing process. It has applied for a patent, and it believes that its application will be successful. 3.) In January 2026, Oriole's application for a patent (#2 above) was granted. Legal and registration costs incurred were $247,800. The patent runs for 20 years. The manufacturing process will be useful to Oriole for 10 years. 4.) Oriole incurred $168,000 in successfully defending one of its patents in an infringement suit. The patent expires during December 2029. 5.) Oriole incurred $446,400 in an unsuccessful patent defense. As a result of the adverse verdict, the patent, with a remaining unamortized cost of…

Answer 2

Question

Chapter 8, Problem 10AE

a.

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses allowance method of handling credit losses.

a.

Expert Solution

Explanation of Solution

Allowance method:

It is a method for accounting bad debt expense, where uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under allowance method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Allowance for doubtful accounts	1,800
	Accounts receivable – Company A		1,800
	(To write off the Company G’s account)

Table (1)

Allowance for doubtful accounts is a contra asset, and it is decreased. Therefore, debit allowance for doubtful accounts for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable – Company G account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Accounts receivable – Company A	800
	Allowance for doubtful accounts		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (2)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Allowance for doubtful accounts is a contra asset, and it is increased. Therefore, credit allowance for doubtful accounts for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Cash	800
	Accounts receivable – Company A		800
	(To record the collection of cash on account.)

Table (3)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

b.

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses direct write off method of handling credit losses.

b.

Expert Solution

Explanation of Solution

Direct write-off method:

Under this method, firms report the estimated uncollectible amount to Bad debts expense. Under the direct write-off method, only the actual losses are recorded as bad debt expense. The gross amount of the accounts receivable is only recorded in the financial statements.

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under direct write off method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Bad Debts Expense	1,800
	Accounts Receivable		1,800
	(To write off the Company G’s account)

Table (4)

Bad debts expense is a component of stockholders’ equity, and it is decreased. Therefore, debit bad debts expense account for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Accounts Receivable	800
	Bad Debts Expense		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (5)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Bad debt expense is a component of stockholders’ equity, and it is increased. Therefore, credit bad debts expense account for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Cash	800
	Accounts receivable – Company A		800
	(To record the collection of cash on account.)

Table (6)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

c.(1)

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses allowance method of handling credit losses.

c.(1)

Expert Solution

Explanation of Solution

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under allowance method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Allowance for doubtful accounts	1,800
	Accounts receivable – Company A		1,800
	(To write off the Company A’s account)

Table (7)

Allowance for doubtful accounts is a contra asset, and it is decreased. Therefore, debit allowance for doubtful accounts for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable – Company A account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Accounts receivable – Company A	800
	Allowance for doubtful accounts		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (8)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Allowance for doubtful accounts is a contra asset, and it is increased. Therefore, credit allowance for doubtful accounts for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Cash	800
	Accounts receivable – Company G		800
	(To record the collection of cash on account.)

Table (9)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

c.(2)

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses direct write off method of handling credit losses.

c.(2)

Expert Solution

Explanation of Solution

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under direct write off method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Bad Debts Expense	1,800
	Accounts Receivable		1,800
	(To write off the Company A’s account)

Table (10)

Bad debts expense is a component of stockholders’ equity, and it is decreased. Therefore, debit bad debts expense account for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Accounts Receivable	800
	Bad Debts Expense		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (11)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Bad debts expense is a component of stockholders’ equity, and it is increased. Therefore, credit bad debts expense account for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Cash	800
	Accounts receivable – Company A		800
	(To record the collection of cash on account.)

Table (12)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 8, Problem 10AE

a.

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses allowance method of handling credit losses.

a.

Expert Solution

Explanation of Solution

Allowance method:

It is a method for accounting bad debt expense, where uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under allowance method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Allowance for doubtful accounts	1,800
	Accounts receivable – Company A		1,800
	(To write off the Company G’s account)

Table (1)

Allowance for doubtful accounts is a contra asset, and it is decreased. Therefore, debit allowance for doubtful accounts for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable – Company G account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Accounts receivable – Company A	800
	Allowance for doubtful accounts		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (2)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Allowance for doubtful accounts is a contra asset, and it is increased. Therefore, credit allowance for doubtful accounts for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Cash	800
	Accounts receivable – Company A		800
	(To record the collection of cash on account.)

Table (3)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

b.

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses direct write off method of handling credit losses.

b.

Expert Solution

Explanation of Solution

Direct write-off method:

Under this method, firms report the estimated uncollectible amount to Bad debts expense. Under the direct write-off method, only the actual losses are recorded as bad debt expense. The gross amount of the accounts receivable is only recorded in the financial statements.

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under direct write off method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Bad Debts Expense	1,800
	Accounts Receivable		1,800
	(To write off the Company G’s account)

Table (4)

Bad debts expense is a component of stockholders’ equity, and it is decreased. Therefore, debit bad debts expense account for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Accounts Receivable	800
	Bad Debts Expense		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (5)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Bad debt expense is a component of stockholders’ equity, and it is increased. Therefore, credit bad debts expense account for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Cash	800
	Accounts receivable – Company A		800
	(To record the collection of cash on account.)

Table (6)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

c.(1)

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses allowance method of handling credit losses.

c.(1)

Expert Solution

Explanation of Solution

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under allowance method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Allowance for doubtful accounts	1,800
	Accounts receivable – Company A		1,800
	(To write off the Company A’s account)

Table (7)

Allowance for doubtful accounts is a contra asset, and it is decreased. Therefore, debit allowance for doubtful accounts for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable – Company A account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Accounts receivable – Company A	800
	Allowance for doubtful accounts		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (8)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Allowance for doubtful accounts is a contra asset, and it is increased. Therefore, credit allowance for doubtful accounts for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Cash	800
	Accounts receivable – Company G		800
	(To record the collection of cash on account.)

Table (9)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

c.(2)

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses direct write off method of handling credit losses.

c.(2)

Expert Solution

Explanation of Solution

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under direct write off method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Bad Debts Expense	1,800
	Accounts Receivable		1,800
	(To write off the Company A’s account)

Table (10)

Bad debts expense is a component of stockholders’ equity, and it is decreased. Therefore, debit bad debts expense account for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Accounts Receivable	800
	Bad Debts Expense		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (11)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Bad debts expense is a component of stockholders’ equity, and it is increased. Therefore, credit bad debts expense account for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Cash	800
	Accounts receivable – Company A		800
	(To record the collection of cash on account.)

Table (12)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 8, Problem 10AE

a.

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses allowance method of handling credit losses.

a.

Expert Solution

Explanation of Solution

Allowance method:

It is a method for accounting bad debt expense, where uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under allowance method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Allowance for doubtful accounts	1,800
	Accounts receivable – Company A		1,800
	(To write off the Company G’s account)

Table (1)

Allowance for doubtful accounts is a contra asset, and it is decreased. Therefore, debit allowance for doubtful accounts for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable – Company G account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Accounts receivable – Company A	800
	Allowance for doubtful accounts		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (2)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Allowance for doubtful accounts is a contra asset, and it is increased. Therefore, credit allowance for doubtful accounts for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Cash	800
	Accounts receivable – Company A		800
	(To record the collection of cash on account.)

Table (3)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

b.

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses direct write off method of handling credit losses.

b.

Expert Solution

Explanation of Solution

Direct write-off method:

Under this method, firms report the estimated uncollectible amount to Bad debts expense. Under the direct write-off method, only the actual losses are recorded as bad debt expense. The gross amount of the accounts receivable is only recorded in the financial statements.

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under direct write off method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Bad Debts Expense	1,800
	Accounts Receivable		1,800
	(To write off the Company G’s account)

Table (4)

Bad debts expense is a component of stockholders’ equity, and it is decreased. Therefore, debit bad debts expense account for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Accounts Receivable	800
	Bad Debts Expense		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (5)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Bad debt expense is a component of stockholders’ equity, and it is increased. Therefore, credit bad debts expense account for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Cash	800
	Accounts receivable – Company A		800
	(To record the collection of cash on account.)

Table (6)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

c.(1)

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses allowance method of handling credit losses.

c.(1)

Expert Solution

Explanation of Solution

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under allowance method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Allowance for doubtful accounts	1,800
	Accounts receivable – Company A		1,800
	(To write off the Company A’s account)

Table (7)

Allowance for doubtful accounts is a contra asset, and it is decreased. Therefore, debit allowance for doubtful accounts for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable – Company A account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Accounts receivable – Company A	800
	Allowance for doubtful accounts		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (8)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Allowance for doubtful accounts is a contra asset, and it is increased. Therefore, credit allowance for doubtful accounts for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Cash	800
	Accounts receivable – Company G		800
	(To record the collection of cash on account.)

Table (9)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

c.(2)

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses direct write off method of handling credit losses.

c.(2)

Expert Solution

Explanation of Solution

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under direct write off method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Bad Debts Expense	1,800
	Accounts Receivable		1,800
	(To write off the Company A’s account)

Table (10)

Bad debts expense is a component of stockholders’ equity, and it is decreased. Therefore, debit bad debts expense account for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Accounts Receivable	800
	Bad Debts Expense		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (11)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Bad debts expense is a component of stockholders’ equity, and it is increased. Therefore, credit bad debts expense account for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Cash	800
	Accounts receivable – Company A		800
	(To record the collection of cash on account.)

Table (12)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 8, Problem 10AE

a.

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses allowance method of handling credit losses.

a.

Expert Solution

Explanation of Solution

Allowance method:

It is a method for accounting bad debt expense, where uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under allowance method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Allowance for doubtful accounts	1,800
	Accounts receivable – Company A		1,800
	(To write off the Company G’s account)

Table (1)

Allowance for doubtful accounts is a contra asset, and it is decreased. Therefore, debit allowance for doubtful accounts for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable – Company G account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Accounts receivable – Company A	800
	Allowance for doubtful accounts		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (2)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Allowance for doubtful accounts is a contra asset, and it is increased. Therefore, credit allowance for doubtful accounts for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Cash	800
	Accounts receivable – Company A		800
	(To record the collection of cash on account.)

Table (3)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

b.

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses direct write off method of handling credit losses.

b.

Expert Solution

Explanation of Solution

Direct write-off method:

Under this method, firms report the estimated uncollectible amount to Bad debts expense. Under the direct write-off method, only the actual losses are recorded as bad debt expense. The gross amount of the accounts receivable is only recorded in the financial statements.

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under direct write off method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Bad Debts Expense	1,800
	Accounts Receivable		1,800
	(To write off the Company G’s account)

Table (4)

Bad debts expense is a component of stockholders’ equity, and it is decreased. Therefore, debit bad debts expense account for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Accounts Receivable	800
	Bad Debts Expense		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (5)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Bad debt expense is a component of stockholders’ equity, and it is increased. Therefore, credit bad debts expense account for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Cash	800
	Accounts receivable – Company A		800
	(To record the collection of cash on account.)

Table (6)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

c.(1)

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses allowance method of handling credit losses.

c.(1)

Expert Solution

Explanation of Solution

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under allowance method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Allowance for doubtful accounts	1,800
	Accounts receivable – Company A		1,800
	(To write off the Company A’s account)

Table (7)

Allowance for doubtful accounts is a contra asset, and it is decreased. Therefore, debit allowance for doubtful accounts for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable – Company A account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Accounts receivable – Company A	800
	Allowance for doubtful accounts		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (8)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Allowance for doubtful accounts is a contra asset, and it is increased. Therefore, credit allowance for doubtful accounts for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Cash	800
	Accounts receivable – Company G		800
	(To record the collection of cash on account.)

Table (9)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

c.(2)

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses direct write off method of handling credit losses.

c.(2)

Expert Solution

Explanation of Solution

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under direct write off method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Bad Debts Expense	1,800
	Accounts Receivable		1,800
	(To write off the Company A’s account)

Table (10)

Bad debts expense is a component of stockholders’ equity, and it is decreased. Therefore, debit bad debts expense account for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Accounts Receivable	800
	Bad Debts Expense		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (11)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Bad debts expense is a component of stockholders’ equity, and it is increased. Therefore, credit bad debts expense account for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Cash	800
	Accounts receivable – Company A		800
	(To record the collection of cash on account.)

Table (12)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

Answer 6

Chapter 8, Problem 10AE

a.

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses allowance method of handling credit losses.

a.

Expert Solution

Explanation of Solution

Allowance method:

It is a method for accounting bad debt expense, where uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under allowance method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Allowance for doubtful accounts	1,800
	Accounts receivable – Company A		1,800
	(To write off the Company G’s account)

Table (1)

Allowance for doubtful accounts is a contra asset, and it is decreased. Therefore, debit allowance for doubtful accounts for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable – Company G account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Accounts receivable – Company A	800
	Allowance for doubtful accounts		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (2)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Allowance for doubtful accounts is a contra asset, and it is increased. Therefore, credit allowance for doubtful accounts for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Cash	800
	Accounts receivable – Company A		800
	(To record the collection of cash on account.)

Table (3)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

Answer 7

Chapter 8, Problem 10AE

a.

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses allowance method of handling credit losses.

Answer 8

a.

Expert Solution

Explanation of Solution

Allowance method:

It is a method for accounting bad debt expense, where uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under allowance method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Allowance for doubtful accounts	1,800
	Accounts receivable – Company A		1,800
	(To write off the Company G’s account)

Table (1)

Allowance for doubtful accounts is a contra asset, and it is decreased. Therefore, debit allowance for doubtful accounts for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable – Company G account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Accounts receivable – Company A	800
	Allowance for doubtful accounts		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (2)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Allowance for doubtful accounts is a contra asset, and it is increased. Therefore, credit allowance for doubtful accounts for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Cash	800
	Accounts receivable – Company A		800
	(To record the collection of cash on account.)

Table (3)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

Answer 9

a.

Expert Solution

Answer 10

a.

Expert Solution

Answer 11

Expert Solution

Answer 12

b.

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses direct write off method of handling credit losses.

b.

Expert Solution

Explanation of Solution

Direct write-off method:

Under this method, firms report the estimated uncollectible amount to Bad debts expense. Under the direct write-off method, only the actual losses are recorded as bad debt expense. The gross amount of the accounts receivable is only recorded in the financial statements.

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under direct write off method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Bad Debts Expense	1,800
	Accounts Receivable		1,800
	(To write off the Company G’s account)

Table (4)

Bad debts expense is a component of stockholders’ equity, and it is decreased. Therefore, debit bad debts expense account for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Accounts Receivable	800
	Bad Debts Expense		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (5)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Bad debt expense is a component of stockholders’ equity, and it is increased. Therefore, credit bad debts expense account for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Cash	800
	Accounts receivable – Company A		800
	(To record the collection of cash on account.)

Table (6)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

Answer 13

b.

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses direct write off method of handling credit losses.

Answer 14

b.

Expert Solution

Explanation of Solution

Direct write-off method:

Under this method, firms report the estimated uncollectible amount to Bad debts expense. Under the direct write-off method, only the actual losses are recorded as bad debt expense. The gross amount of the accounts receivable is only recorded in the financial statements.

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under direct write off method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Bad Debts Expense	1,800
	Accounts Receivable		1,800
	(To write off the Company G’s account)

Table (4)

Bad debts expense is a component of stockholders’ equity, and it is decreased. Therefore, debit bad debts expense account for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Accounts Receivable	800
	Bad Debts Expense		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (5)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Bad debt expense is a component of stockholders’ equity, and it is increased. Therefore, credit bad debts expense account for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
November, 18	Cash	800
	Accounts receivable – Company A		800
	(To record the collection of cash on account.)

Table (6)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

Answer 15

b.

Expert Solution

Answer 16

b.

Expert Solution

Answer 17

Expert Solution

Answer 18

c.(1)

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses allowance method of handling credit losses.

c.(1)

Expert Solution

Explanation of Solution

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under allowance method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Allowance for doubtful accounts	1,800
	Accounts receivable – Company A		1,800
	(To write off the Company A’s account)

Table (7)

Allowance for doubtful accounts is a contra asset, and it is decreased. Therefore, debit allowance for doubtful accounts for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable – Company A account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Accounts receivable – Company A	800
	Allowance for doubtful accounts		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (8)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Allowance for doubtful accounts is a contra asset, and it is increased. Therefore, credit allowance for doubtful accounts for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Cash	800
	Accounts receivable – Company G		800
	(To record the collection of cash on account.)

Table (9)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

Answer 19

c.(1)

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses allowance method of handling credit losses.

Answer 20

c.(1)

Expert Solution

Explanation of Solution

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under allowance method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Allowance for doubtful accounts	1,800
	Accounts receivable – Company A		1,800
	(To write off the Company A’s account)

Table (7)

Allowance for doubtful accounts is a contra asset, and it is decreased. Therefore, debit allowance for doubtful accounts for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable – Company A account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Accounts receivable – Company A	800
	Allowance for doubtful accounts		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (8)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Allowance for doubtful accounts is a contra asset, and it is increased. Therefore, credit allowance for doubtful accounts for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Cash	800
	Accounts receivable – Company G		800
	(To record the collection of cash on account.)

Table (9)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

Answer 21

c.(1)

Expert Solution

Answer 22

c.(1)

Expert Solution

Answer 23

Expert Solution

Answer 24

c.(2)

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses direct write off method of handling credit losses.

c.(2)

Expert Solution

Explanation of Solution

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under direct write off method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Bad Debts Expense	1,800
	Accounts Receivable		1,800
	(To write off the Company A’s account)

Table (10)

Bad debts expense is a component of stockholders’ equity, and it is decreased. Therefore, debit bad debts expense account for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Accounts Receivable	800
	Bad Debts Expense		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (11)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Bad debts expense is a component of stockholders’ equity, and it is increased. Therefore, credit bad debts expense account for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Cash	800
	Accounts receivable – Company A		800
	(To record the collection of cash on account.)

Table (12)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

Answer 25

c.(2)

To determine

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses direct write off method of handling credit losses.

Answer 26

c.(2)

Expert Solution

Explanation of Solution

Prepare the journal entry to record the write off and the subsequent recovery of A’s account under direct write off method as follows:

Date	Account Title and Explanation	Debit ($)	Credit ($)
March, 10	Bad Debts Expense	1,800
	Accounts Receivable		1,800
	(To write off the Company A’s account)

Table (10)

Bad debts expense is a component of stockholders’ equity, and it is decreased. Therefore, debit bad debts expense account for $1,800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $1,800.

Prepare the journal entry to record reinstate the account.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Accounts Receivable	800
	Bad Debts Expense		800
	(To reinstate the Company A’s account to the extent of the recovery)

Table (11)

Accounts receivable is a current asset, it is increased. Therefore, debit accounts receivable account for $800.
Bad debts expense is a component of stockholders’ equity, and it is increased. Therefore, credit bad debts expense account for $800.

Prepare the journal entry to record receipt of cash.

Date	Account Title and Explanation	Debit ($)	Credit ($)
February, 5 (next year)	Cash	800
	Accounts receivable – Company A		800
	(To record the collection of cash on account.)

Table (12)

Cash is a current asset, and it is increased. Therefore, debit cash account for $800.
Accounts receivable is a current asset, and it is decreased. Therefore, credit accounts receivable account for $800.

Answer 27

c.(2)

Expert Solution

Answer 28

c.(2)

Expert Solution

Answer 29

Expert Solution

Answer 30

Ch. 8 - Prob. 1SSQ Ch. 8 - Prob. 2SSQ Ch. 8 - Prob. 3SSQ Ch. 8 - Prob. 4SSQ Ch. 8 - Prob. 5SSQ Ch. 8 - Prob. 6SSQ Ch. 8 - Prob. 7SSQ Ch. 8 - Prob. 8SSQ Ch. 8 - Prob. 9SSQ Ch. 8 - Prob. 10SSQ

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses allowance method of handling credit losses.

Concept explainers

Videos

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses allowance method of handling credit losses.

Explanation of Solution

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses direct write off method of handling credit losses.

Explanation of Solution

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses allowance method of handling credit losses.

Explanation of Solution

Prepare the journal entry to record the write off and the subsequent recovery of A assuming that Incorporation M uses direct write off method of handling credit losses.

Explanation of Solution

Want to see more full solutions like this?

Chapter 8 Solutions