I need some ACCOUNTING HELP..

Question

Hi. can anyone please answer this:

Alcom Comoany decided to write off the $3,000 Wordel Corporation receivable as uncollectible. Subsequently, Wordel makes $950 payment on the account. Prepare journal entries for these two transactions.

Thanks

Answer 1

1. The orig entry to establish the ADA (Allowance for Doubtful Accts) account:

is Debit to Bad Debt expense, Credit to ADA.

Then To write off $3,000 as uncollectible.:

Debit: Allow for Doubtful Accts (ADA)  $3,000

Credit:  A/R   $3,000

2. Subsequent collection of $950:

Debit:  A/R $950

Credit: ADA $950

to reverse write off entry for $950.

Debit:  Cash  $950

Credit:  A/R  $950

To record recpt of $950 cash payment.