Uncollectible Accounts, Using Direct Write-Off Method

Illustrate the effects on the accounts and financial statements of the following transactions in the accounts of Valley Care & Supplies Co., a local hospital supply company that uses the direct write-off method of accounting for uncollectible receivables:

If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.

March 18. Received $20,875 on an account.

March 18. Wrote off the remaining $51,700 owed on account as uncollectible.

Aug. 29. Reinstated the account that had been written off on March 18. (Do not record the collection of cash yet.)

Aug. 29. Received $51,700 cash in full payment for the reinstated account.