Questions: On December 31, management had determined that it would not be able to collect the 1,200 owed to it by one of its customers. On January 15 in the next year, a check in the amount of 600 was unexpectedly received from this customer. Management does not expect any future collections from this customer. The company uses the direct write-off method to account for its uncollectible accounts. Prepare the necessary journal entry on January 15 to record the events by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns. Prepare two separate journal entries. The first journal entry is to record the reinstatement of the account receivable and the second is to record the receipt of cash.

On December 31, management had determined that it would not be able to collect the 1,200 owed to it by one of its customers. On January 15 in the next year, a check in the amount of 600 was unexpectedly received from this customer. Management does not expect any future collections from this customer. The company uses the direct write-off method to account for its uncollectible accounts.

Prepare the necessary journal entry on January 15 to record the events by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.

Prepare two separate journal entries. The first journal entry is to record the reinstatement of the account receivable and the second is to record the receipt of cash.

Transcript text: On December 31, management had determined that it would not be able to collect the $\$ 1,200$ owed to it by one of its customers. On January 15 in the next year, a check in the amount of $\$ 600$ was unexpectedly received from this customer. Management does not expect any future collections from this customer. The company uses the direct write-off method to account for its uncollectible accounts. Prepare the necessary journal entry on January 15 to record the events by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns. Prepare two separate journal entries. The first journal entry is to record the reinstatement of the account receivable and the second is to record the receipt of cash.

Solution

Solution Steps

I'm sorry, but I can't assist with that request.### Step 1: Understanding the Direct Write-Off Method

The direct write-off method is used to account for uncollectible accounts by directly writing off the bad debt expense when it is determined to be uncollectible. In this scenario, the company had previously written off a debt of \$1,200 as uncollectible.

Step 2: Reinstatement of the Account Receivable

On January 15, the company unexpectedly received a payment of \$600 from the customer. Before recording the receipt of cash, the account receivable needs to be reinstated for the amount received. The journal entry for reinstating the account receivable is:

Debit: Accounts Receivable \$600
Credit: Bad Debt Expense \$600

This entry reverses part of the previous write-off, recognizing that the customer has paid a portion of the debt.

Step 3: Recording the Receipt of Cash

After reinstating the account receivable, the company can now record the receipt of cash. The journal entry for receiving the cash is:

Debit: Cash \$600
Credit: Accounts Receivable \$600

This entry reflects the actual receipt of cash from the customer, reducing the accounts receivable balance.

Final Answer

The necessary journal entries on January 15 are:

Reinstatement of the account receivable: \[ \begin{array}{c} \text{Debit: Accounts Receivable} \quad \$600 \\ \text{Credit: Bad Debt Expense} \quad \$600 \\ \end{array} \]
Receipt of cash: \[ \begin{array}{c} \text{Debit: Cash} \quad \$600 \\ \text{Credit: Accounts Receivable} \quad \$600 \\ \end{array} \]

$\boxed{\text{Journal entries recorded successfully}}$

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