Question

Solstice Company determines on October 1 that it cannot collect $50,000 of its accounts receivable from its customer P. Moore. It uses the direct write-off method to record this loss as of October 1. On October 30, P. Moore unexpectedly paid his account in full to Solstice Company. Record Solstice’s entry(ies) to reflect recovery of this bad debt.

Short answer

A debtor is an individual or a client for an organization has to whom the firm's merchandise is sold on a credit basis, i.e., without cash involvement.

Step-by-step solution

Introduction

The organization's bad debt recovery is settled when the debtor pays the full due amount. The amount declared as bad debt is balanced bypassing the relevant journal entry below.

Journal Entry

Date	Particulars	Debit	Credit
a	Accounts receivables	$50,000
	Bad debt expense		$50,000
	(To record the reinstated amount of the bad debt)
b	Cash	$50,000
	Accounts receivables		$50,000
	(To record the cash)