Question

On January 1, Wei company begins the accounting period with a $36,000 credit balance in allowance for doubtful accounts. a. On February 1, the company determined that $8,000 in customer accounts was uncollectible; specifically, $1,500 for Oakley Co. and $6,500 for Brookes Co. Prepare the journal entry to write off those two accounts. b. On June 5, the company unexpectedly received a $1,500 payment on a customer account, Oakley Company, that had previously been written off in part a. Prepare the entries necessary to reinstate the account and to record the cash received.

Answer 1

Answer: The journal entries are as follows:

Explanation:

Given that,

On January 1,

Credit balance in allowance for doubtful accounts = $36,000

(a) On February 1,

Allowance for doubtful accounts    Dr.    $8000

To Accounts receivable-Oakley co.                       $1500

To Accounts receivable-Brookes Co.                    $6500

(b) On June 5,

(i) Accounts receivable- Oakley A/c    Dr.   $1500

    To Allowance for doubtful accounts                     $1500

(ii) Cash A/c             Dr.  $1500

     To Accounts receivable- Oakley          $1500