Question

QS 9-5 Allowance method for bad debts LO P2 Gomez Corp. uses the allowance method to account for uncollectibles. On January 31, it wrote off an $2,000 account of a customer, C. Green. On March 9, it receives a $1,500 payment from Green. 1. Prepare the journal entry for January 31 2. Prepare the journal entries for March 9; assume no additional money is expected from Green.

Answer 1

Answer and Explanation:

The Journal entries are shown below:-

1. Allowance for doubtful accounts Dr, $2,000

            To Account receivable $2,000

(Being  allowance for doubtful is recorded)

Here we debited the allowance for doubtful accounts as it increases the allowance and we credited the accounts receivable as  it decreased the assets

2. Account receivable Dr, $1,500

          To Allowance for doubtful accounts $1,500

(Being is recorded)

Here we debited the accounts receivable as it increased the assets and we credited the allowance for doubtful accounts as  it reduced the assets

3. Cash Dr,  $1,500

          To Account receivable $1,500

(Being cash receipt is recorded)

Here we debited the cash as it increased the assets  and we credited the account receivable as it decreased the assets