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Exercise 7-4 Direct write-off method LO P1 Dexter Company applies the direct write-off method in accounting for uncollectible accounts. March 11 Dexter determines that it cannot collect $45,000 of its accounts receivable from its customer Leer Company. 29 Leer Company unexpectedly pays its account in full to Dexter Company. Dexter records its recovery of this bad debt. Prepare journal entries to record the above selected transactions of Dexter.

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Answer:

Date            Account Titles and Explanation        Debit          Credit

March 11       Bad debt Expenses                             $45,000

                          Account Receivables                                       $45,000

                    (To record uncollectible accounts receivables)

Date            Account Titles and Explanation        Debit          Credit

March 29    Account Receivables                         $45,000

                         Bad debt Expenses                                          $45,000

                    (To record reversal of written off accounts receivables)

Date            Account Titles and Explanation       Debit          Credit

March 29     Cash                                                  $45,000

                             Accounts Receivables                               $45,000

                     (To record receipt of cash from customers)

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