McKinney & Co. estimates its uncollectible accounts as a percentage of credit sales. McKinney made credit...
McKinney & Co. estimates its uncollectible accounts as a percentage of credit sales. McKinney made credit sales of $3,600,000 in 2016. McKinney estimates 3.0% of its sales will be uncollectible.
At the end of the first quarter of 2017, McKinney & Co. reevaluates its receivables. McKinney’s management decides that $8,700 due from Mangold Corporation will not be collectible. This amount was previously included in the allowance account.
On April 23, 2017, McKinney & Co. receives a check from Mangold Corporation for $8,700.
Required:
| Prepare the journal entries for McKinney to record the collection of the account previously written off. |
Homework Answers
Answer
--Journal entries would be:
| Accounts titles | Debit | Credit | |
| #1 | Accounts receivables | $8,700 | |
| Allowance for uncollectible accounts | $8,700 | ||
| (to record re instation of written off amount) | |||
| #2 | Cash | $8,700 | |
| Accounts receivables | $8,700 | ||
| (to record collection of written off account) |
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