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At the end of 2020, Pharoah Co. has accounts receivable of $762,200 and an allowance for doubtful accounts of $60,300. On January 24, 2021, the company learns that its receivable from Megan Gray is not collectible, and management authorizes a write-off of $5,800. On March 4, 2021, Pharoah Co. receives payment of $5,800 in full from Megan Gray. Prepare the journal entries to record this transaction. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)

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Answer:

To reverse the transaction, the journal entry is:

Date                    Account title                                              Debit             Credit

March 4, 2021    Accounts receivable - Megan Gray       $5,800

                           Allowance for doubtful accounts                                  $5,800

To record the receipt of cash:

Date                    Account title                                              Debit             Credit

March 4, 2021     Cash                                                       $5,800

                            Accounts receivable - Megan Gray                            $5,800

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