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.

Question

Business

Malcolm Fernandez

11 February, 16:58

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.

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Answers (1)

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Kieran Gregory · 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