Asked by Kaohulani Palakiko on Jul 21, 2024
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Theta Company determines that a $6,300 account receivable from CorpCo is uncollectible and writes off the account using the direct write-off method on June 16. On August 21, CorpCo pays the $6,300 to Theta Company.
Journalize the entry for the reinstatement of the account receivable and receipt of cash on August 21. You may omit posting references. 
Direct Write-Off Method
A method of accounting for bad debts that writes off an outstanding account receivable as a bad debt expense only when it becomes evident the debt is uncollectible.
Reinstatement
The process of restoring a previous condition or position, such as reinstating a lapsed insurance policy or an employee's job position.
Receipt of Cash
The process of receiving cash as a form of payment, often recorded during accounting transactions.
- Understanding the implementation of the direct write-off technique for bad debts and its influence on the components of the accounting equation.
- Master the application of the allowance method for uncollectible accounts, identifying the adjusting entries and their outcomes.
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Learning Objectives
- Understanding the implementation of the direct write-off technique for bad debts and its influence on the components of the accounting equation.
- Master the application of the allowance method for uncollectible accounts, identifying the adjusting entries and their outcomes.
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