Question

Solstice Company determines on October 1 that it cannot collect $57,000 of its accounts receivable from its customer P. Moore. It uses the direct write-off method to record this loss as of October 1. On October 30, P. Moore unexpectedly pays his account in full to Solstice Company. Record Solstice’s entry(ies) to reflect recovery of this bad debt.

Answer 1

Solstice Company needs to record the recovery of the bad debt from P. Moore. The appropriate entry would reflect a decrease in both the accounts receivable and bad debt expense accounts.

Step-by-step explanation:

When P. Moore pays the account in full, Solstice Company needs to record the recovery of the bad debt. The entry to reflect this would be:

Accounts Receivable - P. Moore $57,000

Bad Debt Expense $57,000

By receiving the payment, the accounts receivable and bad debt expense accounts would be reduced by $57,000 each, bringing them back to their original amounts before the write-off. This would properly reflect the recovery of the bad debt.

Answer 2

The answer is given below;

Step-by-step explanation:

Accounts Receivable-P. Moore Dr.$57,000

Bad Debt Expense Cr.$57,000

Firstly the write off made on Oct-1 will be reinstated to amount being collected from P.Moore as above.

Cash Dr.$57,000

Accounts Receivable-P.Moore Cr.$57,000

In this journal entry, we have recorded collection of cash from customer