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On December 31, 2017, Extreme Fitness has adjusted balances of $800,000 in Accounts Receivable and $55,000 in Allowance for Doubtful Accounts. On January 2, 2018, the company learns that certain customer accounts are not collectible, so management authorizes a write-off of these accounts totaling $10,000. Assume that on February 2, 2018, Extreme Fitness received a payment of $500 from one of the customers whose balance had been written off. Prepare the journal entries to record this transaction. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

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Answer:

The entries is as followed:

February 2 2018

Dr Account Receivable                             500

  Cr Allowance for doubtful account         500

(to reverse receivable written-off)

 Dr Cash           500

  Cr Account Receivable 500

(to record cash collection from receivable)  

Explanation:

As the company apply the allowance method, we apply the following steps to record collection of receivable which has already written-off:

+ First, we reverse the written-off accounting entry which had been made before with the amount of $500 ( Written-off entry: Dr Allowance for doubtful debt - Cr Account Receivable; Reverse entry as shown in the answer part);

+ Second, we record the collection of receivable by Dr Cash (increase) and Cr account receivable (decrease).

The journal entries are to be shown below.

Journal entries:

1 Account Receivable 500

                 Allowance for Doubtful Accounts  500

(being reversal of a customer account  is recorded)

here the account receivable is debited as it increased the assets and credited the allowance as it decreased the assets

2 Cash 500

        Accounts Receivable  500

(being receipt of cash is recorded)

here cash is debited as it increased the assets and credited the account receivable as it decreased the assets

learn more about journal entry here: https://brainly.com/question/24146116

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