Group Discussion Board 3 - Reply
Jacob Mitchell
ACCT 301-B03
Liberty University
Dr. Felicia Olagbemi
June 16, 2014
Throughout his discussion board Nicholas thoroughly answers the questions
regarding Magrath Company. It is a true assessment that Magrath should account for and
report the accounts receivable factored on April 1, 2009. Also, this accounting treatment
is appropriate because, as stated, some of the accounts were written off as uncollectible
while other accounts that were previously written off as uncollectible were collected. This
leads to the need for Magrath to account for and report the accounts receivable on April
1, 2009. As Nicholas describes, in order for the company to account for and report the
factored accounts receivable, Magrath must record a debit to accounts receivable by the
factored amount and a credit to cash for the amount received from the factoring.
In the discussion of how Magrath should account for the collection of accounts
previously written off as uncollectible, it is true that Magrath must reverse the write off
by reinstating the receivables and allowances needed in order to account for the
collection of the accounts that were previously written off as uncollectible. Furthermore,
the company will need to record a debit of the accounts receivable of the previously
uncollected amount and credit the allowance for uncollectible account for the same
amount to reinstate the previously written off receivable. Also, as stated, it will be
necessary for Magrath to record the cash collected. This will be completed by debiting
cash by the previously uncollected amount and crediting the accounts receivable for the
same amount. Nicholas’ paper was very well thought out and accurately covered the
material to answer the provided questions.
