Journalize the following transactions in the accounts of Lamp Light Company, a restaurant supply company that

Journalize the following transactions in the accounts of Lamp Light Company, a restaurant supply company that uses the allowance method of accounting for uncollectible receivables:

Mar. 19. Sold merchandise on account to Midnight Delights Co., $37,500. The cost of the merchandise sold was $23,000.

Aug. 31. Received $22,000 from Midnight Delights Co. and wrote off the remainder owed on the sale of March 19 as uncollectible.

Dec. 22. Reinstated the account of Midnight Delights Co. that had been written off on August 31 and received $15,500 cash in full payment.


Answer:

Mar. 19 Accounts Receivable—Midnight Delights Co. 37,500
Sales 37,500
19 Cost of Merchandise Sold 23,000
Merchandise Inventory 23,000
Aug. 31 Cash 22,000
Allowance for Doubtful Accounts 15,500
Accounts Receivable—Midnight Delights Co. 37,500
Dec. 22 Accounts Receivable—Midnight Delights Co. 15,500
Allowance for Doubtful Accounts 15,500
22 Cash 15,500
Accounts Receivable—Midnight Delights Co. 15,500





Creative Solutions Company, a computer consulting firm, has decided to write off the $11,750 balance of an account owed by a customer, Wil Treadwell. Journalize the entry to record the writeoff, assuming that (a) the direct write-off method is used and (b) the allowance method is used.


Answer:

a.
 Bad Debt Expense 11,750
Accounts Receivable—Wil Treadwell 11,750
b.
 Allowance for Doubtful Accounts 11,750
Accounts Receivable—Wil Treadwell 11,750