Broadway Inc.uses the direct write-off method.Previously,the company had written off the account of M.Douglas in full.Six months later,Broadway collected $600,the full amount due,from M.Douglas.How would Broadway Inc.record this transaction?
A)Debit Bad Debt Expense for $600 and credit Accounts Receivable-M.Douglas for $600.
B)Debit Accounts Receivable-M.Douglas for $600 and credit Bad Debt Expense for $600.
C)Debit Accounts Receivable-M.Douglas for $600,credit Bad Debt Expense for $600,debit Cash for $600,and credit Accounts Receivable-M.Douglas for $600.
D)Debit Accounts Receivable-M.Douglas for $600 and credit Bad Debt Expense for $600
E)Debit Cash for $600 and credit Accounts Receivable-M.Douglas for $600

Question

Quizplus · Accepted Answer

When using the direct write-off method, the account is first reinstated by debiting Accounts Receivable and crediting Bad Debt Expense, then the cash collection is recorded by debiting Cash and crediting Accounts Receivable.