Question

Question: Refer to the information in Exercise 7-7 to complete the following requirements.

b. On June 5 of that next period, the company unexpectedly received a $900 payment on a customer account, Oakley Company, that had previously been written off in part a. Prepare the entries necessary to reinstate the account and to record the cash received.

Short answer

Cashis an item used forrendering daily minortransactionsin an organization. It is reported under theasset sectionof thefirm's balance sheet, and a separatecash flowstatement is prepared to measure theinflow and outflow of cash.

Step-by-step solution

Introduction

If a debtor pays the due amount expectedly after writing off its account under the bad debt, the debtor's account is closed by reversing the entry and entering the amount under the cash received.

Journal entry

Date	Particulars	Debit	Credit
June 5	Accounts receivables- Oakley Company	$900
	Allowance for doubtful accounts		$900
	(To record the debtor)
June 5	Cash	$900
	Accounts receivable- Oakley Company		$900
	(To record the cash collection)