Construction World extended credit to customers Johnny in the amount of 135,900 for this purchase of construction on April 2 terms of sale are n/150. The cost of the purchase to Construction world is 61,200 on september 4, Construction World determined that Jonnys account was uncollectable and wrote off debt on December 3, Mr.

Record each Construction World transaction with Johnny. In order to demonstrate the write-off and then subsequent collection of an accounts reacievable assume in this example that construction world rarely extends credit directly so transaction is permitted to use the direct write off method. Remember however that most cases that direct write off method is not allowed if an amount box does not requre any leave it blank.

method is not allowed. If an amount box does not require an entry, leave it blank. Apr. 2 Accounts Receivable: Jenkins Sales Revenue To record sale, n/150 Apr. 2 Cost of Goods Sold Merchandise Inventory To record cost of sale Sept. 4 Bad Debt Expense Accounts Receivable: Jenkins To record bad debt 10 II II 10 Io Dec. 3 Accounts Receivable: Jenkins Bad Debt Expense To reinstate previously written-off bad debt Dec. 3 Cash Accounts Receivable: Jenkins To record full payment Feedback Check My Work Remember that an account previously written off can be reinstated in order to paid