Question

On December 31, 2015, management had determined that it would not be able to collect the $1,200 owed to it by its customer Acme, Inc. On September 15, 2016, a check in the amount of $600 was unexpectedly received from Acme. Management does not expect any future collections from Acme. (The company uses the direct write-off method to account for its uncollectible accounts.) Prepare the necessary journal entry to record the events by selecting the account names and dollar amounts from the drop-down menus. (Use a compound entry instead of preparing two separate journal entries.)

Answer 1

Answer: Please see explanation column

Explanation:

Journal to record  uncollectible accounts using the direct write-off method

Date               Accounts                      Debit              Credit

Dec 31, 2015 Bad debts expense    $1,200

        Accounts Receivable -Acme Inc                     $1,200

Compound Journal entry to record recovery using Direct write off method for the events

Date               Accounts                                    Debit             Credit

Sep 15, 2016  Acct Receivable —Acme, Inc.   $600

Bad Debt Expense                                                                  $600

Cash                                                       $600

Account Receivable—Acme, Inc.                                         $600