AC116 Unit 2 Receivables Write-Off and Recovery Example

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A grower written off after a hailstorm and then paying in full two weeks later is the sequence recorded in this AC116 Unit 2 receivables entries problem for a composite orchard supply distributor. Purdue Global AC 116, Accounting II, uses receivables to show BS in Accounting students how a later entry can undo an earlier one under the allowance method. Ridgeline Orchard Supply's September journal records summarized credit sales and collections, the $2,800 write-off of Hollow Creek Farm, the reinstatement and the cash payment. A section shows that the write-off left net realizable value unchanged at $48,400 and cites the credit loss standard. Footed T-accounts prove ending receivables of $51,700 and an allowance of $3,600, and a closing note explains why the unchanged allowance does not prove the estimate right.

CourseAC116 Accounting II
UnitUnit 2
Paper typeReceivables entries problem
LengthAbout 630 words, 5 pages double-spaced
FormatAPA 7 student paper
SchoolPurdue University Global
ProgramBS in Accounting
UpdatedOctober 2026

Free sample paper for AC116 Unit 2

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Written Off in Harvest Month, Paid Two Weeks Later: A Unit 2 Receivables Entries Problem for an Orchard Supply Distributor

[Student Name]

Purdue University Global

AC116: Accounting II

Unit 2 Receivables Entries Problem

[Instructor Name]

[Date]

Ridgeline Orchard Supply, Inc., its customers and amounts are composite; the textbook, framework and credit loss standard cited are real.

What this part is doingNaming the write-off and the recovery in the lead tells the grader the problem covers the entry sequence the unit is built around.
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Opening Balances, September 1

Accounts Receivable $48,000 debit. Allowance for Doubtful Accounts $3,600 credit. Net realizable value, the amount Ridgeline expects to collect, $44,400. The company uses the allowance method, estimating losses before specific accounts fail (Franklin et al., 2019).

Journal

Sept. 1 to 11, summarized. Accounts Receivable, debit $30,000; Sales Revenue, credit $30,000. Credit sales to orchards for harvest bins, ladders and picking bags, invoices 6201 to 6248, net 30.

Sept. 1 to 11, summarized. Cash, debit $26,000; Accounts Receivable, credit $26,000. Collections on August and early September invoices.

Sept. 12. Allowance for Doubtful Accounts, debit $2,800; Accounts Receivable, Hollow Creek Farm, credit $2,800. Wrote off the account of a grower whose owner reported the farm could not pay after a hailstorm destroyed its crop; credit manager's memo 14.

Sept. 12 to 25, summarized. Accounts Receivable, debit $32,000; Sales Revenue, credit $32,000. Credit sales, invoices 6249 to 6301.

Sept. 26. Accounts Receivable, Hollow Creek Farm, debit $2,800; Allowance for Doubtful Accounts, credit $2,800. Reinstated the account after the farm's crop insurance settlement arrived and the owner offered to pay in full.

Sept. 26. Cash, debit $2,800; Accounts Receivable, Hollow Creek Farm, credit $2,800. Received payment in full, check 1187.

Sept. 26 to 30, summarized. Cash, debit $29,500; Accounts Receivable, credit $29,500. Collections.

The Write-Off Entry

Writing off Hollow Creek Farm changed no total that matters to a reader, since the allowance already held an estimate covering it; the entry only moved $2,800 from an estimate to a named account.

What this part is doingThe highlighted sentence explains the entry that surprises most readers, which is the concept the problem is designed to test.
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Before the write-off: receivables $52,000, allowance $3,600, net realizable value $48,400. After: receivables $49,200, allowance $800, net realizable value $48,400. No expense was recorded on September 12. The expense was recognized earlier, when the allowance was estimated, so that the cost of selling on credit was matched with the sales that created it. Current guidance goes further and requires the allowance to reflect the losses Ridgeline expects over each account's whole life, drawing on its own history, today's conditions and supportable forecasts (Financial Accounting Standards Board, 2016).

The Recovery

The recovery takes two entries for a reason. The first reverses the write-off, restoring Hollow Creek's balance and the allowance, so the customer's ledger shows a debt that was paid rather than one that was forgiven. The second records the cash. Combining them into one entry would leave no record that the account was ever reinstated, which matters the next time Ridgeline decides whether to extend the farm credit.

T-Accounts, Footed

Accounts Receivable. Debits: opening $48,000; sales $30,000; reinstatement $2,800; sales $32,000; total $112,800. Credits: collections $26,000; write-off $2,800; Hollow Creek payment $2,800; collections $29,500; total $61,100. Ending balance $51,700 debit.

Allowance for Doubtful Accounts. Credits: opening $3,600; reinstatement $2,800; total $6,400. Debits: write-off $2,800. Ending balance $3,600 credit.

Net realizable value at September 30: $51,700 minus $3,600 equals $48,100.

What the Balances Show

The allowance ends where it began because the only write-off of the month was recovered. That should not be read as proof the estimate is right. Harvest month is when growers are paid and pay their suppliers; if more farms had been hit by the hail, the allowance would have been drawn down with no recovery. The estimate is reviewed again at year end in the next unit, using an aging of the accounts, because the conceptual framework expects estimates to be faithful to current conditions rather than carried forward unchanged (Financial Accounting Standards Board, 2018).

What this part is doingEnding with the limit of the month's evidence prepares for the aging estimate in the next unit.
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References

Financial Accounting Standards Board. (2016). Financial instruments, credit losses (Topic 326): Measurement of credit losses on financial instruments (Accounting Standards Update No. 2016-13). https://www.fasb.org

Financial Accounting Standards Board. (2018). Conceptual framework for financial reporting: Chapter 1, The objective of general purpose financial reporting, and Chapter 3, Qualitative characteristics of useful financial information (Statement of Financial Accounting Concepts No. 8, as amended). https://www.fasb.org

Franklin, M., Graybeal, P., & Cooper, D. (2019). Principles of accounting, volume 1: Financial accounting. OpenStax. https://openstax.org/details/books/principles-financial-accounting

The Purdue Global AC116 Unit 2 instructions

In the second AC116 unit, students record a month of receivable activity under the allowance method. Journalize credit sales, collections, a write-off and a recovery in date order, each with a short explanation. The write-off debits the allowance, not an expense, so show that net realizable value does not change. Record the recovery in two entries: reinstate the account, then record the cash. After the journal, prepare T-accounts for Accounts Receivable and the allowance, foot them and compute net realizable value. Some sections ask for a brief explanation of why the allowance method matches losses with sales. Keep customer names consistent with the problem. The problem usually fills two pages. Where the answer explains why the allowance method exists, a short APA 7 citation to the textbook or the credit loss standard supports it.

How the AC 116 Unit 2 example is put together

The sample states opening balances and the allowance method. The journal summarizes early September sales and collections, then records the September 12 write-off with the credit manager's memo as its source, the later sales, the September 26 reinstatement after a crop insurance settlement, the payment and final collections. The highlighted sentence explains why the write-off changes no meaningful total, and figures before and after prove net realizable value stayed at $48,400. A paragraph cites the credit loss standard's expected-loss approach. A section explains why the recovery takes two entries. Footed T-accounts follow, ending at $51,700 and $3,600. A closing section cautions that the steady allowance reflects one recovered account, not a tested estimate.

Where the points sit in the AC116 Unit 2 rubric

Receivables problems are graded on correct entries in the correct order. The write-off must debit the allowance, and graders check that no expense was recorded on that date. The two-entry recovery is a frequent scoring point. Explanations under entries carry points in AC116. T-accounts must be footed and their balances must match the journal. Net realizable value should be computed correctly. Explaining why the write-off leaves net receivables unchanged shows conceptual understanding, often rewarded separately. Consistent customer names and dates matter. Clean layout matters because graders trace each T-account figure back to a dated entry, and APA 7 citations for any explained rule complete the grade.

Common AC116 Unit 2 mistakes, and how to avoid them

The most common receivables error is debiting Bad Debt Expense on the write-off date, which double counts the loss under the allowance method. Others record the recovery as a single entry to cash and the allowance, losing the customer's payment history. Net realizable value is computed with the wrong sign. T-accounts are not footed. Write-offs are confused with the year-end adjustment, which comes in the next unit. Explanations are skipped. If your receivables list is ready but the entries will not tie to the balances, our team can record the month and prove both accounts from your problem.

Get an AC116 Unit 2 example written to your instructions

The Unit 2 transaction list your AC116 section posted, with customer names and dates as given, is what the journal is built on; add the instructions and rubric. The journal and both T-accounts arrive inside 24-48h, footed, with net realizable value shown on each date, and the first custom sample is free of charge. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.

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AC116 Unit 2 questions, answered

Why does the recovery need two entries instead of one?

Because the first entry restores the customer's account to what it was before the write off, and the second records the payment against it. The result is a subsidiary ledger showing that this customer did pay, which matters the next time credit is extended. A single entry reaches the same general ledger totals but erases that history, which is why many AC116 rubrics require the pair.

Does the write off change total assets?

No. Both the receivable and the allowance fall by the same amount, and since the allowance is subtracted from the receivable on the balance sheet, the net figure stays put. Total assets changed earlier, when the estimate was booked. Stating that plainly under the T-accounts is often worth a line of marks in a problem that is otherwise entirely mechanical.

What if my problem uses the direct write off method?

Then there is no allowance, the write off debits the expense directly, and the recovery reverses it in the same two-step form. Some AC116 sections assign the direct method first to show why it is limited: expense lands in the period the customer defaulted, not in the period of the sale. The sample follows whichever method the problem names.

Where can I find a free AC116 Unit 2 sample paper?

You can read a complete AC116 Unit 2 receivables entries problem on this page, recording a grower's write-off and recovery for an orchard supplier with footed T-accounts and net realizable value.

Why does net realizable value stay the same in the AC116 Unit 2 sample?

The write-off reduced both receivables and the allowance by $2,800. Because the allowance is subtracted from receivables, net realizable value stayed at $48,400 before and after.