Solstice Company determines on October 1 that it cannot collect $50,000 of its accounts receivable from its customer P. Moore. It uses the direct write-off method to record this loss as of October 1. On October 30, P. Moore unexpectedly paid his account in full to Solstice Company. Record Solsticeâs entry(ies) to reflect recovery of this bad debt.

Please see explanation below.

Explanation:

Oct 1

Dr Accounts receivable $50,000

Cr Bad debts expense $50,000

(Accounts receivable is an asset and are debited when it increases, Expenses are credited when they increase)

Oct 30

Dr Cash $50,000

Cr Accounts receivable $50,000

(Cash is debited when it increases because it is an asset while Accounts receivable is also an asset hence credited when it decreases.)

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