Flagler Corporation uses the direct write-off method. On February 2, Year 1, after making numerous efforts to collect $9,600 from a customer, the company wrote off the account. On April 1, Year 1, the customer paid $8,000 to Flagler. Prepare the entries to record the February 2 and April 1 transactions in general journal format.
What will be an ideal response?
The first entry on April 1 is to reinstate the receivable. Flagler must reinstate the receivable when the it is received. Using the direct write-off method, the reinstatement increases accounts receivable and decreases uncollectible accounts expense. The second entry on April 1 is to record the receipt of the payment. It is recorded as a debit to cash and a credit to accounts receivable.
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