A customer of Halifax Manufacturing recently filed for bankruptcy protection two months ago, leading Halifax's credit manager to conclude that the company would never collect the balance of $15,600 owed by the customer. Suppose that three months after filing bankruptcy, Halifax's customer paid its outstanding account balance. Which of the following journal entries would be made to record this transaction?
A. Debit Cash and credit Sales for $15,600.
B. Debit Cash and credit Accounts Receivable for $15,600.
C. Debit Cash and credit Bad Debt Expense for $15,600.
D. Debit Accounts Receivable and credit Allowance for Doubtful Accounts for $15,600; debit Cash and credit Accounts Receivable for $15,600.
Answer: D
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