Let’s go a bit further with the example in M8-3. Assume that on February 2, 2017, Donnelly received a payment of $500 from one of the customers whose balance had been written off. Prepare the journal entries to record this transaction. 

Data From M8-3.

At the end of 2016, Donnelly Fitness Centre has adjusted balances of $800,000 in Accounts Receivable and $55,000 in Allowance for Doubtful Accounts. On January 2, 2017, the company learns that certain customer accounts are not collectable, so management authorizes a write-off of these accounts totalling $5,000.