1. CENTURY 21 ACCOUNTING © Thomson/South-Western LESSON 17-2 Writing Off and Collecting Uncollectible Accounts Receivable Original created by M.C. McLaughlin, Thomson/South-Western Modified by Deborah L. Burns, Johnston County Schools, West Johnston High School

2. CENTURY 21 ACCOUNTING © Thomson/South-Western Writing Off and Collecting Uncollectible Accounts Receivable When a customer account is determined to be uncollectible, a journal entry is made to cancel the uncollectible account This entry cancels the uncollectible amount from the general ledger account Accounts Receivable as well as the customer account in the accounts receivable subsidiary ledger Canceling the balance of a customer account because the customer does not pay is called writing off an account 2 LESSON 17-2

3. CENTURY 21 ACCOUNTING © Thomson/South-Western 3 LESSON 17-2 JOURNALIZING WRITING OFF AN UNCOLLECTIBLE ACCOUNT RECEIVABLE 1 page 519 January 4. Wrote off Metro Food Court’s past-due account as uncollectible, $1,621.00. Memorandum No. 3. 1.Debit 2.Credit and customer’s name 22  The book value of accounts receivable is the same both before & after writing off an uncollectible account because the same amount is deducted from both A/R and the allowance account

4. CENTURY 21 ACCOUNTING © Thomson/South-Western 4 LESSON 17-2 2.Post the credit amount to general ledger. POSTING AN ENTRY TO WRITE OFF AN UNCOLLECTIBLE ACCOUNT RECEIVABLE 4 page 520 1 2 3 1.Post the debit amount to general ledger. 3.Post the credit amount to customer account. 4.Write Written off in the customer account.  The journal entry to write off an uncollectible account affect the two general ledger accounts, A/R & the Allowance account, and the customer account

5. CENTURY 21 ACCOUNTING © Thomson/South-Western REOPENING AN ACCOUNT PREVIOUSLY WRITTEN OFF 5 LESSON 17-2  Occasionally, after an account has been written off, the customer pays the delinquent account  Several accounts must be changed to recognize payment of a written-off account receivable  Two journal entries are recorded for the collection of a written-off account receivable  A general journal entry to reopen the customer account, and  A cash receipts journal entry to record the cash received on account

6. CENTURY 21 ACCOUNTING © Thomson/South-Western 6 LESSON 17-2 REOPENING AN ACCOUNT PREVIOUSLY WRITTEN OFF 1.Enter a debit to Accounts Receivable. Place a diagonal line in the Post. Ref. column. 2 page 521 January 30. Received cash in full payment of Metro Food Court’s account, previously written off as uncollectible, $1,621.00. Memorandum No. 5 and Receipt No. 12. 2.Enter a credit to Allowance for Uncollectible Accounts. 1 1

7. CENTURY 21 ACCOUNTING © Thomson/South-Western 7 LESSON 17-2 RECORDING CASH RECEIVED FOR AN ACCOUNT PREVIOUSLY WRITTEN OFF page 522 January 30. Received cash in full payment of Metro Food Court’s account, previously written off as uncollectible, $1,621.00. Memorandum No. 5 and Receipt No. 12.  After the entry to reopen the customer account is recorded, an entry is made to record the cash received on the account  The entry in the cash receipts journal is the same as for any other collection of accounts receivable

8. CENTURY 21 ACCOUNTING © Thomson/South-Western 8 LESSON 17-2 3.Write the words Reopen account in the Item column of the customer account. POSTING ENTRIES FOR COLLECTING A WRITTEN-OFF ACCOUNT RECEIVABLE page 523 3 2 1 1 4 1.Post the general journal entry to the general ledger. 2.Post the debit portion of the general journal entry to the customer account. 4.Post the cash receipts journal entry to the customer account.

9. CENTURY 21 ACCOUNTING © Thomson/South-Western 9 LESSON 17-2 TERM REVIEW writing off an account page 524