Entries for Uncollectible Accounts, using Direct Write-Off Method Journalize the following transactions in the accounts of Arrow Medical Co., a medical equipment company that uses the direct write-off method of accounting for uncollectible receivables: Jan. 19. Sold merchandise on account to Dr. Sinclair Welby, $52,800. The cost of the merchandise sold was $28,500.
July 7. Received $15,300 from Dr. Sinclair Welby and wrote off the remainder owed on the sale of January 19 as uncollectible.
Nov. 2. Reinstated the account of Dr. Sinclair Welby that had been written off on July 7 and received $37,500 cash in full payment.

Arrow Medical Co.

Journal Entries:

Jan. 19: Debit Accounts Receivable (Dr. Sinclair Welby) $52,800

Credit Sales Revenue $52,800

To record the sale of goods on account.

Debit Cost of goods sold $28,500

Credit Inventory $28,500

To record the cost of goods sold.

July 7: Debit Cash $15,300

Credit Accounts Receivable (Dr. Sinclair Welby) $15,300

To record the receipt on account.

Debit Bad Debts Expense $37,500

Credit Accounts Receivable (Dr. Sinclair Welby) $37,500

To write-off the balance on account as bad debts.

Nov. 2: Debit Accounts Receivable (Dr. Sinclair Welby) $37,500

Credit Bad Debts Expense $37,500

To reinstate and reverse the bad debts written off.

Debit Cash $37,500

Credit Accounts Receivable (Dr. Sinclair Welby) $37,500

To record the receipt on account.

Explanation:

a) Data and Analysis:

Jan. 19: Accounts Receivable (Dr. Sinclair Welby) $52,800 Sales Revenue $52,800

Cost of goods sold $28,500 Inventory $28,500

July 7: Cash $15,300 Accounts Receivable (Dr. Sinclair Welby) $15,300

Bad Debts Expense $37,500 Accounts Receivable (Dr. Sinclair Welby) $37,500

Nov. 2: Accounts Receivable (Dr. Sinclair Welby) $37,500 Bad Debts Expense $37,500

Cash $37,500 Accounts Receivable (Dr. Sinclair Welby) $37,500

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