Ben is a customer of Haskins & Co.which uses the allowance method to account for uncollectible accounts.The company wrote off his account of $1,200 on August 15.On October 12,he sent in a payment of $560.What will Haskins & Co.record first to reinstate his account?

Question

Quizplus · Accepted Answer

To reinstate Ben's account, Haskins & Co. should first reverse the write-off entry made on August 15. This can be done by debiting the Accounts Receivable/Ben account for $1,200 and crediting the Allowance for Doubtful Accounts for $1,200. Then, when Ben's payment of $560 is received on October 12, Haskins & Co. will debit Cash for $560 and credit Accounts Receivable/Ben for $560. Therefore, option D is the correct answer. Option A is incorrect because it doesn't address the reversal of the write-off entry. Option B is incorrect because it would increase bad debt expense, which is not necessary in this situation. Option C is incorrect because it would decrease the allowance for doubtful accounts, which is not necessary in this situation.

Ben Is a Customer of Haskins & Co