Exercise 7-9 (Algo) Comparing direct write-off and allowance method entries LO P1, P2 Prepare journal entries to record the following under (a) the direct write-off method and (b) the allowance method. May 3 Sal Company determines that it cannot collect its accounts receivable of $3,300 from Joey Company. May 21 Sal Company unexpectedly receives payment of $3,300 cash from Joey Company toward its previously written-off account. Sal records recovery of this bad debt.

Required A (Prepare journal entries to record the direct write-off method.)

May 03 Sal Company determines that it cannot collect its accounts receivable of $3,300 from Joey Company.

May 21 Sal Company unexpectedly receives payment of $3,300 cash from Joey Company toward its previously written-off account. Record the transaction to reinstate the account previously written off.

May 21 Sal Company unexpectedly receives payment of $3,300 cash from Joey Company toward its previously written-off account. Record the cash receipt.

Required B (Prepare journal entries to record the allowance method.)

May 3 Sal Company determines that it cannot collect its accounts receivable of $3,300 from Joey Company.

May 21 Sal Company unexpectedly receives payment of $3,300 cash from Joey Company toward its previously written-off account. Record the transaction to reinstate the account previously written off.

May 21 Sal Company unexpectedly receives payment of $3,300 cash from Joey Company toward its previously written-off account. Record the cash receipt.