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    Allowance method for bad debts

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    Milner Corp. uses the allowance method to account for uncollectibles. On October 31, it wrote off a $1,000 account of a customer, C. Schaub. On December 9, it receives a $200 payment from Schaub.

    1. Prepare the journal entry or entries for October 31.
    2. Prepare the journal entry or entries for December 9: assume no additional money is expected from Schaub.

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    Solution Preview

    1. Prepare the journal entry or entries for October 31.

    Since Milner Corp uses the allowance method, it would have created an Allowance for Doubtful Accounts. When a account is written off we utilize the allowance account. When the account is written off, ...

    Solution Summary

    The solution explains journal entries for collection of a written off accounts receivable under the allowance method

    $2.19

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