Lesson 5: Writing Off & Reinstating Accounts Receivable
Duration of Days: 4
Lesson Objective
Students will record the write-off of an uncollectible account using the Allowance Method and journalize the reinstatement and collection of a previously written-off account. Students will analyze why net income is not affected at the time of write-off.
• What happens when a specific customer fails to pay?
• How is a write-off recorded under the Allowance Method?
• Why does writing off an account not affect net income?
• What happens if a customer later pays after being written off?
• Why must an account be reinstated before recording collection?
• Write-off
• Reinstatement
• Allowance for Doubtful Accounts
• Accounts Receivable
• Contra asset
• Net realizable value
• Recovery of account
• Credit risk
B. Accounting Principles: Identify and describe generally accepted accounting principles (GAAP/IFRS) and explain how the application of these principles
impacts the recording of financial transactions and the preparation of financial statements.
5. Record transactions affecting accounts receivable, including uncollectible
accounts, write-offs, and recoveries.
The SAT measures student proficiency in math reading, language, and writing. With strong scores, accounting students set themselves up for successful entry into accounting and finance programs.
Description:
Students begin with a scenario in which a specific customer account is deemed uncollectible. They record the write-off:
Purpose:
This lesson reinforces how the Allowance Method functions over time. Students observe how writing off an account reduces both Accounts Receivable and the Allowance account without affecting net income, demonstrating that the expense was already recognized during estimation.
DOK 1: Record write-off and recovery entries.
DOK 2: Explain financial statement impact.
DOK 3: Analyze why the Allowance Method prevents income distortion.
Businesses often recover accounts previously considered uncollectible. Students connect this to debt collection agencies, medical billing, and credit card recovery. Discussion may include how companies track credit risk trends.
• Writing off an account increases bad debt expense.
• A write-off reduces net income.
• Recovery is recorded directly as revenue.
• The Allowance account should be zero after write-offs.
• T-account visual demonstration
• Step-by-step modeling of write-off and recovery
• Small group scenario practice
• Guided comparison chart (Write-Off vs Recovery)
• Scaffolded journal entry template
• Spanish vocabulary support for ELL studentsinformation, Spanish version available for ELL students
• Journal entries for write-off and recovery
• T-account analysis
• Exit ticket explaining why net income does not change at write-off
• Short written explanation describing the lifecycle of an uncollectible account
• Century 21, Accounting, General Journal, 11th edition
• Online working papers (MindTap)
• Microsoft Excel software (optional T-account modeling)
• Sample receivables scenario
• T-account handout
• Class notes, Do Now, Exit Tickets
• Projector for walkthrough