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Dexter Company uses the direct write-off method. March 11 Dexter determines that it cannot collect $9,000 of its accounts receivable from Leer Co. 29 Leer Co. unexpectedly pays its account in full to Dexter Company. Dexter records its recovery of this bad debt. Prepare journal entries to record the above transactions.

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Answer and Explanation:

The journal entries are as follows:

a. Bad debt $9,000

    To account receivable $9,000

(Being the bad debt expense is recorded)

b. Account receivable Dr $9,000

       To bad debt $9,000

(being the reversal is recorded)

c. Cash Dr $9,000

      To account receivable $9,000

(Being the recovery of the bad debt is recorded)

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