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Horngren'S Financial And Managerial Accounting
Found in: Page 466

Short Answer

Collecting a receivable previously written off—direct write-off method

Spring Garden Greenhouse had trouble collecting its account receivable from Steve Stone. On June 19, 2018, Spring Garden Greenhouse finally wrote off Stone’s $600 account receivable. On December 31, Stone sent a $600 check to Spring Garden Greenhouse.

Journalize the entries required for Spring Garden Greenhouse, assuming Spring Garden Greenhouse uses the direct write-off method.

See the step by step solution

Step by Step Solution

Step 1: Collection of written off Receivable

When the company has received the previously written off receivable then the same has to Reinstate the previously written off amount and the collection entry will be posted.

Step 2: Journalize the transactions for Spring Garden Greenhouse

DateAccount and explanationDebit Credit
June 19, 2018

Bad Debts

Accounts receivable – Steve stone

(Wrote off an uncollectible account)
$ 600$ 600
Dec 13, 2018

Accounts receivable – Steve stone

Bad Debts Expense

Reinstated previously written off account.

$ 600$ 600
Dec 13, 2018

Cash

Accounts receivable – Steve stone

Collected cash on account
$ 600$ 600

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