Allowance Method versus Direct Write-Off Method

On March 10, Mize, Inc., declared an $1,100 account receivable from the Anders Company as uncollectible and wrote off the account. On November 18, Mize received an $500 payment on the account from Anders.

Assume that Mize uses the allowance method of handling credit losses. Prepare the journal entries to record the write-off and the subsequent recovery of Ander's account.

Assume that Mize uses the direct write-off method of handling credit losses. Prepare the journal entries to record the write-off and the subsequent recovery of Ander's account.

Assume that the payment from Anders arrives on February 5 of the following year rather than on November 18 of the current year. (1) Prepare the journal entries to record the write-off and subsequent recovery of Ander's account under the allowance method. (2) Prepare the journal entries to record the write-off and subsequent recovery of Ander's account under the direct write-off method.

a.

General Journal
Date	Description	Debit	Credit
Mar.10	Allowance for Doubtful AccountsBad Debts ExpenseAccounts Receivable - Anders CompanyCash	$Answer	$Answer
	AnswerAllowance for Doubtful AccountsAccounts Receivable - Anders CompanyBad Debts ExpenseCash	Answer	Answer
	To write off the Anders Company account.
Nov.18	Allowance for Doubtful AccountsCashAccounts Receivable - Anders CompanyBad Debts Expense	$Answer	$Answer
	AnswerCashAllowance for Doubtful AccountsBad Debts ExpenseAccounts Receivable - Anders Company	Answer	Answer
	To reinstate the Anders Company account.
Nov.18	Bad Debts ExpenseAllowance for Doubtful AccountsCashAccounts Receivable - Anders Company	$Answer	$Answer
	AnswerCashBad Debts ExpenseAllowance for Doubtful AccountsAccounts Receivable - Anders Company	Answer	Answer
	To record remittance.

b.

General Journal
Date	Description	Debit	Credit
Mar.10	Bad Debts ExpenseAccounts Receivable - Anders CompanyAllowance for Doubtful AccountsCash	$Answer	$Answer
	AnswerCashAllowance for Doubtful AccountsAccounts Receivable - Anders CompanyBad Debts Expense	Answer	Answer
	To write off the Anders Company account.
Nov.18	Accounts Receivable - Anders CompanyAllowance for Doubtful AccountsCashBad Debts Expense	$Answer	$Answer
	AnswerCashAllowance for Doubtful AccountsAccounts Receivable - Anders CompanyBad Debts Expense	Answer	Answer
	To reinstate the Anders Company account.
Nov.18	AnswerAllowance for Doubtful AccountsAccounts Receivable - Anders CompanyCashBad Debts Expense	$Answer	$Answer
	AnswerAllowance for Doubtful AccountsBad Debts ExpenseAccounts Receivable - Anders CompanyCash	Answer	Answer
	To record remittance.

c.Part 1

General Journal
Date	Description	Debit	Credit
Mar.10	Bad Debts ExpenseCashAllowance for Doubtful AccountsAccounts Receivable - Anders Company	$Answer	$Answer
	AnswerBad Debts ExpenseCashAccounts Receivable - Anders CompanyAllowance for Doubtful Accounts	Answer	Answer
	To write off the Anders Company account.
Feb.5	Allowance for Doubtful AccountsAccounts Receivable - Anders CompanyBad Debts ExpenseCash	$Answer	$Answer
	AnswerCashAccounts Receivable - Anders CompanyAllowance for Doubtful AccountsBad Debts Expense	Answer	Answer
	To reinstate the Anders Company account.
Feb.5	Accounts Receivable - Anders CompanyAllowance for Doubtful AccountsCashBad Debts Expense	$Answer	$Answer
	Accounts Receivable - Anders CompanyAllowance for Doubtful AccountsCashBad Debts Expense	Answer	Answer
	To record remittance.

c.Part 2

General Journal
Date	Description	Debit	Credit
Mar.10	CashAllowance for Doubtful AccountsAccounts Receivable - Anders CompanyBad Debts Expense	$Answer	$Answer
	AnswerBad Debts ExpenseCashAccounts Receivable - Anders CompanyAllowance for Doubtful Accounts	Answer	Answer
	To write off the Anders Company account.
Feb.5	CashBad Debts ExpenseAllowance for Doubtful AccountsAccounts Receivable - Anders Company	$Answer	$Answer
	AnswerBad Debts ExpenseAllowance for Doubtful AccountsCashAccounts Receivable - Anders Company	Answer	Answer
	To reinstate the Anders Company account.
Feb.5	Accounts Receivable - Anders CompanyCashBad Debts ExpenseAllowance for Doubtful Accounts	$Answer	$Answer
	AnswerBad Debts ExpenseCashAllowance for Doubtful AccountsAccounts Receivable - Anders Company	Answer	Answer
	To record remittance.