Gorman Ltd uses the allowance method. At 30 June, Accounts receivable balance is $50,000 and the Allowance for Doubtful Debts has a debit balance of $1,800. A debtor was declared bankrupt and the $1,200 owed was written off. Gorman subsequently received notification from liquidators that 25 cents in the dollar would be repaid for all debts owed by Gorman Ltd. The adjusting entry to reinstate the debt would be:

Question

Answer

Debit Cash $1,200 and Credit Accounts receivable $1,200

Answer

Debit Accounts receivable $1,200 and Credit Allowance for Doubtful debts $1,200

Answer

Debit Accounts receivable $300 and Credit Allowance for Doubtful debts $300

Answer

Debit Cash $300 and Credit Accounts receivable $300

Crowdly

Gorman Ltd uses the allowance method. At 30 June, Accounts receivable balance is...

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