Gideon Company uses the allowance method of accounting for uncollectible account

Question

Gideon Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Gideon Company wrote off the $2,000 uncollectible account of its customer, A. Hopkins. On July 10, Gideon received a check for the full amount of $2,000 from Hopkins. On July 10, the entry or entries Gideon makes to record the recovery of the bad debt is: O Accounts Receivable -A. Hopkins 2,000 Allowance for Doubtful Accounts 2,000 Cash 2.000 Accounts Receivable A. Hopkins 2,000 (D |Cash 2.000 Bad debts expense 2,000 Accounts Receivable A Hopkins 2.000 Bad debts expense Cash 2,000 2.000 Accounts Receivable A Hopkins 2,000 |Allowance for Doubtful Accounts 2,000 Accounts Receivable-A. Hopkins 2,000 Accounts Recevable-A Hopkins Cash 2,000 Cash 2.000 Accounts Receivable A Hopkins 2.000

Explanation / Answer

1) Answer

(A) Accounts Receivable A/c - Hopkins Dr.$2,000

To Allowance for Doubtful accounts A/c Cr.$2,000

Cash A/c Dr.$2,000

To Accounts Receivable A/c Cr.$2,000

Explanation : Since we have already passed certain at the time of estimating the uncollectible amount and writing off the same at earlier time now we need to reverse the same as a first entry and have to recognize the cash receipt entry against accounts receivable as a regular entry at the time of receipt of cash.

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