 So we are then going to see what account we need to put this into, we're not going to get the cash, therefore we're going to debit the allowance for doubtful accounts. So again, this is the allowance method, meaning we're not going to write it off to bad debt expense when someone tells us that they went bankrupt, why? Because we've already come up with an estimate of what we think is related to this receivable that will be uncollectible. We didn't know who was going to be uncollectible, but based on past experience we said we're pretty sure that some of these receivables are not going to be collectible and we've already accounted for that and made an estimate and tried to match that estimate with the same time period in which the revenue was generated. Now we know part of that that is not going to pay us and that's going to be this company here. So we're going to say take it out of the allowance and reduce the receivable. There will be no net effect on the net receivable because we already adjusted for this estimate. So I'm going to copy this. We're going to put this down here in C10, right click and paste it 123. All right, so let's post this out and see what happens. I'm going to go to the taskbar. I'm going to bring this down to about 80. Then we'll scroll over here and post this. So cash, first count. Cash is here. Cash is our top count on the trial balance. Cash is the first count on the general ledger. This is called posting. We are in cell 09, we're going to select equals and then point to the 20,000. What's going to happen to 100 is going to go up by 20 to 120, put us out of balance by the 20 and we see the 120 in the trial balance. Then we're going to post the receivable second account. Here's the receivable. Here's the receivable second account on the general ledger. So the receivable will be right here. We're going to have a credit. So we are in P17 equals going to point to that 30,000. What's going to happen? The receivable is going to go down from 1,191 to 1,161. We see that receivable here. We see that we are now out of balance by the 10 that we now need to report to and record to allowance for Dauphel accounts. So here's allowance for Dauphel accounts is our third account. It's going to be the third account in the general ledger. So we are now in S10 equals and we're going to point to that 10,000. So the 30,000 is a credit. The 10,000 over here is a debit. Those are opposites. Therefore, the credit is going to go down to 21. That'll put us back in balance here. We see the 21 there. Note also that we affected the receivable account and whenever we think about the receivables, we often are going to ask the boss is going to ask us, how much money do people owe us? Well, people owe us 1,161 according to the trial balance. Well, who owes us the money and when are we going to get paid? In order to do that, we cannot just go to the general ledger. We have to go to the subsidiary ledger down here and here's all the people that owe us and companies that owe us and we will then be saying that this company no longer owes us the money because they paid us 20, but we're also writing off the other piece because they went bankrupt of 10. Therefore that 30 needs to go down to zero. All we're doing is recording the same information up here in the general ledger down here with a bit more detail, that detailed being by customer. So in cell P31, we're going to say equals point to that 30,000. That's going to spring the G company balance down to zero. So they no longer owe us money. If we add up the all of the accounts in the subsidiary ledger for accounts receivable adds up to 1,161. That ties out to the general ledger. That ties out to the trial balance. What happened to the net receivables? No change because the 1 million 161 minus the 21 is the 1 million 140. Actually there was a change by the amount that was received in cash. So the change was the 10,000. There was no change from the amount that was taken out of the allowance account. All right. So let's see what we have next. We are now on. It's going to make this a little bit larger. I'm going to bring it back up to 100% down here on the taskbar and then we're going to scroll over so we can see the question. We are now on 7,2 which says that received payment from CW after we had assumed the debt uncollectable and had written it off. So now what's happening, we wrote off that CW company wasn't going to pay us. And then we came back and all of a sudden they walked in the door and paid us. We're amazed by that. Doesn't usually happen. We thought that they were not going to pay us. They hadn't paid us for a long time. We wrote them off. So how are we going to account for that? And just so we can see this activity, obviously if we scroll down here to the subsidiary ledger, we see they owed us money. We took them down to zero, meaning we assumed that they were not going to pay us even though we didn't get the cash. Our books now show that they don't owe us any money because we gave up on collecting from them. Now they came in and paid us. So how are we going to account for this? It's a little bit different than we might think because the first thing I've always asked us to think about is, is cash affected? And of course, in this case, it is affected. We got cash. But we really want to reverse the transaction we did last time first. And let me try to explain why. If we just debit cash, then we're not going to record the fact of the audit trail down here showing that this company is good, that they were good on their transaction. Our subsidiary ledger should show that they paid us the cash. And so we want to basically reverse our last transaction to basically put them back into the receivable and then do our normal transaction, which would be to debit cash and credit receivable. So in order to help our audit trail for the most part, we're going to make this a little bit longer of a transaction than it otherwise would be. So let me show you how that works. We have the journal entry up here. This is the journal entry we did to write them off. We want to put them back in the receivable and then take them off again to give us that audit trail. So basically, we reduced the receivable. We're going to put the receivable back on the books. So we credited the receivable, reduced in the receivable. We're going to debit the receivable now to put them back on the book. So I'm going to copy this, and we're going to paste this in C12. Right-click, paste it 123. We're going to debit the 9,000. Then we're going to credit the allowance for doubtful accounts. We're going to reverse this transaction, this transaction showing that we wrote them off, that this client did not pay us. So I'm going to copy that. I'm going to put the cursor in C13, right-click, paste it 123, and that'll be the negative 9,000. So I'm going to post this, and then we'll record the second half of this transaction. So I'm going to bring this down to 80 again. We're going to scroll over here, and we're going to post the receivable. So that's the debit. That's the second account on the trial balance. That's the second account on the general ledger. We're going to go to the debit half because we are now debiting this account. So we are in cell 018 equals, then point to the debit of 9,000, and that's going to bring the balance back up by 9,000 to 1 million 170. So we wrote it off. We put it back on the book. We can see the activity now. We're going to do posting the allowance now. That's a credit, and it's the third account on the trial balance. It's a third account on the general ledger. Here's the allowance. We're going to put it in the next open area. So we are in T11. So within T11, we'll say equals and point to that 9,000. So now the 21,000 is going to go up in the credit direction because the credit and a credit makes the credit go up and back to 30,000 here. So there's our transaction. We're also going to have to post this 9,000 activity in the receivable down by customer. So if we go by customer down here, and we see CW, and we're going to post that same 9,000, we're going to put them back on the books. So we are in S32 equals that 9,000, bringing the balance back up from 0 to 9,000. So now we basically put them back on the books here. They now owe us the money, and now we're going to write it off again. So now we're going to write it off again, but we're going to show this time that they actually paid us within the transaction. So if we go back to the auto trail and look at what happened, we'll show that there was payment through this process. So we can see now that the total here of all the people that owe us money in the subsidiary ledger adds up to 1,000,170, ties out to the 1,000,170 here, ties out to the 1,000,170 on the trial balance. So we're going to bring this back up to 100, scroll back over here. And now we're going to record the normal transaction that happens when someone pays us and they owe us money. So now we can think through the questions. Is cash affected? Yeah, we got cash because they owe us money. So we're going to debit the cash, copy that, paste that on top. I'm not going to put a new date. I'm going to skip a line, however, and put it down here, right-click, paste it 1,2,3. And we're going to put the 9,000 in. And then we're going to credit something for 9,000. And we're going to do our normal transaction. Why did they pay us? Because we did work, but we did it in the past. And the account showing that they owe us money is the receivable. So here it is here. We're going to credit the receivable, now reducing it again. So we're going to copy that and we're going to paste it 1,2,3 here. Okay, so a couple things to note that once this full transaction, these four transactions or these four accounts, note that once again I broke it out into two accounts to simplify it. So if we go back to this transactions and if we see it in two accounts rather than one account with two debits on top and two credits, it might be a little less to follow. It probably would be easier to follow to have the two accounts. So that's why I would break it out in that format. Also note that you might be saying, well, why don't we're doing too much work here? We could have just debited cash and then credit the allowance right there. And instead of doing this idea and having four accounts because all we're doing is putting it in the receivable and then taking it out of the receivable. Why are we doing that when we could have just gotten to the same point by just debiting cash and then crediting the allowance for Delphi accounts? And the reason is basically the audit trail. We want to show on the audit trail that, hey, we put them back on the books. They're back in good standing. And then we have our normal transaction taking place here. So that's why it's going to be looking like this. All right. So now we're going to post this second journal entry out. I'm going to bring this down a bit back down to 80 on the taskbar. Going to scroll back over here and we will post out the checking accounts. The checking account, of course, is the first count on the trial balance. First count on the general ledger. We are in cell O 10. So O 10 equals and we're going to point to the D 15 and that makes the cash go up to 129. Now we're going to post the receivable half of it. So here's the receivable. Here's the receivable second account on the trial balance, second account on the general ledger. We're going to be down here in P 19. So P 19 equals then we're going to point to the 9000. That debit will go down. So we're going to do that. And there is goes down to 1 million 161. We're going to post that same activity and the receivable accounts in the subsidiary ledger for the receivables. So scroll down here. Look at the subsidiary ledger. We're going back to CW. We just put the 9000 back on there. And now we're going to take it off again. So we are now in cell T 33 equals and we're going to post that same nine. And there it is. So they originally owed us 9000. We wrote it off thinking we weren't going to get paid. Then we put it back on the books so that we can see the audit trail and wrote it off. But this time the journal entry will look like a normal journal entry, meaning we got paid for it. And we put them back in good standing in that way. And now, of course, the company no longer owes us the money. If we go down to the subsidiary ledger and look at all of the subsidiary ledger accounts, they add up to 1 million 161 on the subsidiary ledger for receivables. That ties out to the general ledger for receivables and that ties out to the trial balance for receivables. All right, let's make this large again. We're going back up to 100% on the task bar. Scrolling back over next activity on 820 over here says that we determined that P company and BD company would not pay the amount owed. All right, so we have two more companies that we're determining that we are not going to receive the funds from. So we're basically saying that the receivable related to those two companies is not going to be paid. Therefore, cash is not affected because we're not going to get the money for it. And we're going to have to take this receivable down. So the receivable has a debit balance in it. We need to make it go down. How do we make something go down? We do the opposite thing to it as what it is. That's a debit. We're going to credit it. So I'm going to copy that receivable. And we're going to put it on the bottom in C19. Here's the date. I'm going to put it on the bottom because the credits traditionally go on the bottom. Right click and paste it 123. Now notice they didn't give us the amount here. We don't have the amount, but we can find that on the subsidiary ledger. So P company and BD company. So P company and BD company. Going to have to remember that P company, BD company. And so we're going to be down here. And so P company owes us 6, 7, BD owes us the 8,000. So the total in the receivable 6, 7 plus 8,000 means that we're not going to get 14, 7. So that's the amount that we're going to have to put over here that will not be receivable from these two companies. So we're going to back over here. And I'm going to put a negative in the credit side, negative 14, 7. That's how much we're going to have to take out of the receivable in order to account for the fact that we do not believe that these two companies will pay us. We're going to have to debit something for that same amount to have an equal number of debits and credits. What will the debit be? Not going to be cash. We didn't, we didn't get any cash, which is unfortunate. But we had planned that that would happen by setting up the allowance account and saying that we understand that of this 1 million, 1.61 part of it will not be collected. And we have already made an estimate in that. We currently have 30,000 in there. So what is going to happen is we now know who's not going to pay us. And therefore, we're going to reduce the receivable directly by the amount that's not going to be paid. And we're just going to take it out of the allowance. There'll be no net effect on the net receivables of the allowance of minus, I mean the account stable minus the allowance of 1 million, 1.31. So the debit will be the allowance account. I'm going to copy that. I'm going to put that in C18, right-click, paste it 1, 2, 3. We're going to make this smaller again, going back down to 80 on the task bar. Scrolling over so we can see the information here. We got the allowance. That's the second or third account on the trial balance. Third account on the general ledger. We are in the debit side. So we are in S12. So within S12, we're going to say equals point.