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A. Stine Co. previously wrote off a $200 bad debt from Thorn Co. using the direct write-off method. On October 1, Stine unexpectedly receives a check in the amount of $200 from Thorn Co. The entry to record this receipt of $200 will include a: (Check all that apply.)

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Answer:

Journal Entry

October 1

Dr. Account Receivables  $200

Cr. Bad Debt                      $200

Dr. Cash / Bank                  $200

Cr. Account receivables    $200

OR

Dr. Cash / Bank                  $200

Cr. Bad Debt                      $200

Explanation:

A receivable is written off when it is expected to be uncollectable. In this question, the Stine Co. previously wrote off and now the check from Stine is received. While writing off Thorn Co. removed the receivable value fom the accounting records. Now we need to adjust the value and record the transaction to make accounting records correct.

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