Question

Collecting a receivable previously written off—direct write-off method

Spring Garden Greenhouse had trouble collecting its account receivable from Steve Stone. On June 19, 2018, Spring Garden Greenhouse finally wrote off Stone’s \(600 account receivable. On December 31, Stone sent a \)600 check to Spring Garden Greenhouse.

Journalize the entries required for Spring Garden Greenhouse, assuming Spring Garden Greenhouse uses the direct write-off method.

Short answer

When the company has received the previously written off receivable then the same has to Reinstate the previously written off amount and the collection entry will be posted.

Step-by-step solution

Collection of written off Receivable

When the company has received the previously written off receivable then the same has to Reinstate the previously written off amount and the collection entry will be posted.

Step 2: Journalize the transactions for Spring Garden Greenhouse

Date	Account and explanation	Debit	Credit
June 19, 2018	Bad Debts Accounts receivable – Steve stone (Wrote off an uncollectible account)	$ 600	$ 600
Dec 13, 2018	Accounts receivable – Steve stone Bad Debts Expense Reinstated previously written off account.	$ 600	$ 600
Dec 13, 2018	Cash Accounts receivable – Steve stone Collected cash on account	$ 600	$ 600