Solstice company, which uses the direct write-off method, determines on october 1 that it cannot collect $66,000 of its accounts receivable from its customer, p. moore. on october 30, p. moore unexpectedly pays his account in full to solstice company. record solstice’s entries for recovery of this bad debt.

The journal entry for recovery is shown below:

Explanation:

When the company, determine that it could not collect the amount, then the entry which should be recorded is:

Accounts receivable A/cDr  $66,000

            Bad debts expenseA/cCr  $66,000

But on October 30, the company received the full amount from the customer, then entry for recovery of the bad debt is as:

Cash A/cDr    $66,000

      Accounts Receivable A/cCr   $66,000

both are integral parts of a corporate balance sheet. the cash flow statement, or statement of cash flows, measures the sources of a company's cash and its uses of cash over a specific time period. the income statement measures a company's financial performance, such as revenues, expenses, profits or losses over a specific time period (in fact, it's sometimes called a statement of financial performance).

a cash flow statement shows exactly how much money a company has received and how much it has spent, traditionally over a period of one month. it captures the current operating results and changes on the balance sheet, such as increases or decreases in accounts receivable or accounts payable, and does not include noncash accounting items such as depreciation and amortization. the cash flow generally comes from revenue received as a result of business activity, but it may be augmented by funds available as a result of credit. a cash flow statement is used to determine the short-term viability and liquidity of a company, specifically how well it is positioned to pay its bills and vendors.

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