Two year ago, Green Corporation, an accrual basis taxpayer, sold merchandise on credit to John, an individual. Green’s a
Posted: Mon Apr 25, 2022 7:45 am
Two year ago, Green Corporation, an accrual basis taxpayer, sold
merchandise on credit to John, an individual. Green’s account
receivable from John was $20,000. Last year, John filed for
bankruptcy and Green was notified that it could expect to receive
20 cents on the dollar. Accordingly, Green took a $16,000 bad debt
deduction on last year’s tax return. In June of the current year,
Green received a $6,000 payment from John in final settlement of
the debt. How should Green account for the payment in the current
year?
merchandise on credit to John, an individual. Green’s account
receivable from John was $20,000. Last year, John filed for
bankruptcy and Green was notified that it could expect to receive
20 cents on the dollar. Accordingly, Green took a $16,000 bad debt
deduction on last year’s tax return. In June of the current year,
Green received a $6,000 payment from John in final settlement of
the debt. How should Green account for the payment in the current
year?