Nigel Lighting uses the direct charge-off method of recording bad debts. On Sept. 4, the $300 account balance of Louis Blue was charged off. However, on November 15, Blue paid $70 of the amount previously written off. The entry to record the payment from Blue would include: A)debit Accounts Receivable $300; credit Uncollectible Account Expense $300 B)debit Cash $70; credit Accounts Receivable $70 C)debit Allowance for Doubtful Accounts $70; credit Accounts Receivable $70 D)debit Uncollectible Account Expense $70; credit Cash $70

Question

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Since Nigel Lighting uses the direct charge-off method, the accounts receivable of $300 was already written off as uncollectible. Therefore, the entry to record the payment from Blue would be to debit Cash for the amount paid, $70, and credit Accounts Receivable for the same amount. Option B is the correct choice.

Nigel Lighting Uses the direct Charge-Off Method of Recording Bad