Plumbing Unlimited Uses the Direct Write-Off Method for Uncollectible Accounts

question 87

Essay

Plumbing Unlimited uses the direct write-off method for uncollectible accounts. Record the following transactions in general journal form.
Aug 15 Sold merchandise on account to Maureen Townsend for $3,500. The cost to
Plumbing Unlimited for the merchandise is $1,000.
Sept 15 Received $1,200 cash payment from Maureen Townsend on her account.
Sept 30 Received $800 cash payment from Maureen Townsend on her account.
Oct 15 Wrote off the balance due on Maureen's account as uncollectible.

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Definitions:

Adjustment of Debts

A legal process or agreement designed to modify the terms or conditions of debt, often to extend the repayment period or reduce the amount of the installments.

Liquidation Proceedings

The process in a business context where a company's assets are distributed to claimants as part of the dissolution of the company.

Chapter 7

A bankruptcy process outlined in the U.S. Bankruptcy Code allowing individuals or businesses to discharge their debts by liquidating their assets.

Bankruptcy Code

The Bankruptcy Code is the federal law governing bankruptcy proceedings in the United States, providing for various forms of debt relief for individuals and organizations.