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Journalize the following transactions using the direct write-off method of accounting for uncollectible receivables.

April. 1 Sold merchandise on account to Jim Dobbs, $7,200. The cost of goods sold is $5,400.
June 10 Received payment for one-third of the receivable from Jim Dobbs and wrote off the remainder.
Oct. 11 Reinstated the account of Jim Dobbs and received cash in full payment.

Sagot :

The journal entry for the transactions will be:

1st April

Debit Account receivables $7200

Credit Sales $7200

(To record sales)

Debit Cost of goods sold $5400

Credit Inventory $5400

(To record cost of goods sold)

10th June

Debit Cash $2400

Credit Account receivable $2400

(To record cash received from customer)

Debit Allowance for uncollectible items $4800

Credit Account receivable $4800

(To record write-off)

11th October

Debit Account receivable $4800

Credit Allowance for uncollectible items $4800

( To record reinstatement of account)

Debit Cash $4800

Credit Account receivable $4800

( To record full cash gotten from customer)

The account receivable on 10th June was calculated as:

= (1/3 × $7200) = $2400

Learn more about journal entry on:

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