NEXT Brief Exercise 8-4 At the end of 2016, Whispering Winds Corp. has accounts
ID: 2563017 • Letter: N
Question
NEXT Brief Exercise 8-4 At the end of 2016, Whispering Winds Corp. has accounts 1. On January 24, 2017, it is learn receivable of $749,900 and an allowance for doubtful accounts of $23,580 ed that the company's receivable from Madonna Inc. is not collectible and therefore 2. On March 4, 2017, Whispering Winds Corp. receives payment of $4,564 in full from Madonna Inc. management authorizes a write-off of $4,564 Prepare the journal entries to record this transaction. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Credit (To record recovery of accounts receivable.) (To record collection of accounts receivable.) SHOW LIST OF ACCOUNTS LINK TO TEXTExplanation / Answer
1. On Jan 24 2017, company's receivable is not colletable and therefore management authorize a write off of $4,564
Dr Allowance for Doubtful Debts -----$4,564
Cr Accounts Receivable --- $4,564
2. On March 4th receives a payment in full from Madonna inc
Collecting a previously written off receivable
In some instances , a company actually collects a receivable that it had previously written off. In This case company makes two journal entries. The first is to reverse the writing off the receivable that was made in the previous journal entry
Dr Accounts Receivable --- 4,564
Cr Allowance for doubtful debts---- 4,564
The second journal entry is the collection of cash it is
Dr Cash .........4,564
Cr Accounts Receivable ----4,564
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