1. Based on the scenario below, how should the recorded journal entry be prepared? How can you record the
- Why will the actual write-off not result in a reduction of Wayne Corporation's income?
- If Timber Creek recovered from the bankruptcy and paid the $50,000 owed to Wang?
Wang Corporation follows generally accepted accounting principles in accounting for uncollectibles. Wang received notification from a bankruptcy court that its customer, Timber Creek, had been adjudicated and released from all claims presently pending against it by Wang Corporation. Frank Wang, owner of Wang Corporation, was not at all pleased with this decision. Frank had anticipated recovering at least $50,000 from Timber Creek, and that balance remained in the Accounts Receivable accounts of Wang Corporation. Because Wang Corporation has no further remedies for collection, Frank directed the accounting department to make a journal entry to write off the account of Timber Creek.