Customer G. Smith owed Stonehollow Electronics $425. On April 27, 2018, Stonehollow determined this account receivable to be uncollectible and wrote off the account. The company uses the direct write-off method. On July 15, 2018, Stonehollow received a check for $425 from the customer. How should the July 15, 2018 transaction be recorded?

Question

Quizplus · Accepted Answer

When using the direct write-off method, the account must first be reinstated by reversing the write-off entry before recording the cash collection. This involves debiting Accounts Receivable and crediting Bad Debt Expense, followed by recording the cash receipt by debiting Cash and crediting Accounts Receivable.

Customer G July 15 Cash 425 Accounts Receivable - G. Smith 425\begin{array} { l l l } \text { July } 15 & \text { Cash } & 425 \\& \text { Accounts Receivable - G. Smith }&&425\end{array} July 15​ Cash Accounts Receivable - G. Smith ​425​425​

Customer G $\begin{array} { l l l } \text { July } 15 & \text { Cash } & 425 \\& \text { Accounts Receivable - G. Smith }&&425\end{array}$