Olympic Supply company uses the direct-off method of accounting for uncollectibl

Question

Olympic Supply company uses the direct-off method of accounting for uncollectible account.
Instructions:
Record the following transactions in the general journal.
1. On April 10, sold merchandise on account to Sonya Dickson, $600 plus sales tax, Sales slip 928.
2. On November 30, wrote off Sonya Dickson's account as uncollectible, $630, Memorandum 78.
3. On December 30, received $630 from Sonya Dickson for full payment of her account. This account was written off on November 30, Memorandum 89 and Receipt 277.

Explanation / Answer

1. On April 10, sold merchandise on account to Sonya Dickson, $600 plus sales tax, Sales slip 928.

Debit: Accounts receivable 630

Credit: Sales revenue 600

Credit: Sales tax payable 30

2. On November 30, wrote off Sonya Dickson's account as uncollectible, $630, Memorandum 78.

Debit: Bad debt expense 600

Debit: Sales tax payable 30

Credit: Accounts receivable 630

3. On December 30, received $630 from Sonya Dickson for full payment of her account. This account was written off on November 30, Memorandum 89 and Receipt 277.

Debit: Accounts receivable 630

Credit: Bad debt expense 600

Credit: sales tax payable 30

Debit: Cash 630

Credit: Accounts receivable 630

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