On January 1, Wolfie's Supply Sold $222 Worth of Goods

question 140

Essay

On January 1, Wolfie's Supply sold $222 worth of goods to customer Abe Smith on account. For several months, Wolfie's tried unsuccessfully to collect from the customer, and finally decided to write off the account. (Wolfie's uses the allowance method.)
Later in the year, however, the customer came in to Wolfie's, apologized for the late payment and handed over a check for $222. To properly record the recovery of an account previously written off, two journal entries are needed-one to restore the receivable previously written off, and one to record the cash receipt. Please show the first of these two entries.

---

Definitions:

Weak Axiom

In economic theory, a principle stating that if a consumer prefers bundle A to bundle B, then they will not prefer B to A when prices change, keeping income constant.

Revealed Preference

A theory suggesting that consumers' preferences can be determined by observing their purchasing behavior and the choices they make among different goods.

Weak Axiom

In the context of consumer choice theory, it is a postulate stating that if a consumer prefers bundle A over bundle B when both are affordable, then she will not choose B when A becomes more affordable.

Revealed Preferences

The theory that consumers' preferences can be determined by their purchasing habits and behavior rather than through their expressed desires or responses to surveys.