High Performance Cell Phones

Price: $2.99


E8-18 Journalizing transactions using the direct-write off method and
reporting receivables on the balance sheet [10–20 min]

High Performance Cell Phones sold $23,000 of merchandise to Anthony Trucking
Company on account. Anthony fell on hard times and paid only $8,000 of the
account receivable. After repeated attempts to collect, High Performance finally
wrote off its accounts receivable from Anthony. Six months later High Performance
received Anthony’s check for $15,000 with a note apologizing for the late payment.

Requirements

1. Journalize for High Performance:
a. Sale on account, $23,000. (Ignore cost of goods sold.)
b. Collection of $8,000 on account.
c. Write-off of the remaining portion of Anthony’s account receivable. High
Performance uses the direct write-off method for uncollectibles.
d. Reinstatement of Anthony’s account receivable.
e. Collection in full from Anthony, $15,000.

2. Show how High Performance would report receivables on its balance sheet after all entries have been posted.