Mandy Smith's account was written off last year. She owed City Company $5,000. Using the allowance method, the journal entry to reinstate her account involves:

Question

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When reinstating an account that was previously written off under the allowance method, the entry is to debit the accounts receivable (to increase it back) and credit the allowance for doubtful accounts (to decrease the allowance since the account is no longer considered bad debt). This reverses the original write-off entry.

Mandy Smith's Account Was Written Off Last Year