On April $12,$ Maddox Company declared a $$2,500$ account receivable from the Ward Company as uncollectible and wrote off the account.

On December $5,$ Maddox received a $$1,750$ payment on the account from Ward.

a$.$ Assume that Maddox uses the allowance method of handling credit losses. Determine the financial statement effect to record the write$-$off and the subsequent recovery of Ward$$s account.

Use negative signs with answers, when appropriate.

If a transaction increases and decreases the same Balance Sheet category, enter the increase amount in the first row and the decrease amount directly below $($in the second row$).$

Balance Sheet Income Statement

Stockholders'

Transaction Assets $=$ Liabilities $+$ Equity Revenues $-$ Expenses $=$ Net Income

Write$-$off the account

Reinstate the account to the extent of recovery

Record the subsequent recovery

b$.$ Assume that the payment from Ward arrives on the following January $18,$ rather than on December $5$ of the current year.

Is there any difference in the overall financial statement impact?

Answer