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Horngren'S Financial And Managerial Accounting
Found in: Page 449

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Short Answer

Johnson Company uses the allowance method to account for uncollectible receivables. On September 2, Johnson wrote off a

$14,000 account receivable from customer J. Mraz. On December 12, Johnson unexpectedly received full payment from Mraz on

the previously written off account. Johnson records an adjusting entry for bad debts expense of $800 on December 31.

9. Journalize Johnson’s write-off of the uncollectible receivable.

10. Journalize Johnson’s collection of the previously written off receivable.

11. Journalize Johnson’s adjustment for bad debts expense.

(9) Allowance for bad debts account will be debited and accounts receivable-J.Miraz will be credited by $14,000 respectively.

(10) Firstly, Accounts receivable- J. Mraz will be debited and allowance for Bad Debts will be credited by $14,800, respectively. Then, cash account will be debited and accounts Receivable- J. Mraz will be credited by $14,800, respectively.

(11) Bad debt expense will be debited and allowance for bad debts will be credited by $800, respectively.

See the step by step solution

Step by Step Solution

Step 1: Definition of bad debts

Bad debt represents the amount owed by the customers that remains uncollectible.

Step 2: Journal entry for written-off

Date

Particulars

Debit

Credit

September 2

Allowance for Bad Debts

$14,000

Accounts Receivable- J. Mraz

$14,000

(Write-off uncollectible account)

Step 3: Journal entry for reinstatement and collection

December 12

Accounts Receivable- J. Mraz

$14,000

Allowance for Bad Debts

$14,000

(Reinstated previously written off bad debts)

December 12

Cash

$14,000

Accounts Receivable- J. Mraz

$14,000

(Collected cash on account)

Step 4: Journal entry for adjustment of bad debts expense

Date

Particulars

Debit

Credit

December 31

Bad Debts Expense

$800

Allowance for Bad Debts

$800

(Adjustment entry for bad debts)

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