3) New scenario: Assume that on January 23, 2018 Capricornus Co. wrote off $500

Question

3) New scenario: Assume that on January 23, 2018 Capricornus Co. wrote off $500 due from Ursa Minor Co. due to Ursa Minor Co.'s inability to pay what they owed. What journal entry would Capricornus Co. record for this write off assuming Capricornus Co uses the allowance method? 01/23/2018 4) (Continuation of question 3). Now assume that on February 10, 2018 Ursa Minor Co. pays the amount previously written off by Capricornus Co. What two journal entries must Capricornus Co. record related to this collection of a previously written off Accounts Receivable? 02/10/2018 02/10/2018 w transcribed image text

Explanation / Answer

1/23/2018 Allowance for Doubtful accounts 500             Accounts Receivable 500 2/10/2018 Accounts Receivable 500           Allowance for Doubtful accounts 500 2/10/2018 Cash 500             Accounts Receivable 500

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