Journalize: March 15 Received $2,500 partial payment on a $5,000 accounts receivable balance. Wrote off the rest of the account as uncollectible.
To journalize the given transaction, follow these steps:
1. Identify the accounts involved: In this case, we have Accounts Receivable and Allowance for Doubtful Accounts (or Bad Debts Expense).
2. Determine the debit and credit: Based on the transaction, we received a partial payment and wrote off the remaining amount. The partial payment reduces the Accounts Receivable balance, while the write-off reduces the Asset and increases the Allowance for Doubtful Accounts (or Bad Debts Expense).
3. Assign the dollar amounts to the accounts: The partial payment was $2,500, and the remaining balance has been deemed uncollectible.
Now, let's journalize the transaction:
Date: March 15
Debit: Allowance for Doubtful Accounts (Bad Debts Expense) - $2,500
Credit: Accounts Receivable - $2,500
This entry represents the partial payment received, reducing both the Accounts Receivable and Allowance for Doubtful Accounts (Bad Debts Expense).
Date: March 15
Debit: Allowance for Doubtful Accounts (Bad Debts Expense) - $2,500
Credit: Accounts Receivable - $2,500
This entry reflects the write-off of the remaining $2,500 as uncollectible. As a result, both the Accounts Receivable and Allowance for Doubtful Accounts (Bad Debts Expense) decrease.