BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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2
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1 and 3
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1 and 2
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1, 2, and 3
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Detailed explanation-1: -When it is determined that an account cannot be collected, the receivable balance should be written off. When the unit maintains an allowance for doubtful accounts, the write-off reduces the outstanding accounts receivable, and is charged against the allowance – do not record bad debt expense again!
Detailed explanation-2: -Answer and Explanation: A. a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable. When the allowance method is used, the entry to record the write-off of a specific account consists of a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable.
Detailed explanation-3: -When a specific customer’s account is identified as uncollectible, the journal entry to write off the account is: A credit to Accounts Receivable (to remove the amount that will not be collected) A debit to Allowance for Doubtful Accounts (to reduce the Allowance balance that was previously established)
Detailed explanation-4: -Answer and Explanation: When the allowance method is used to account for uncollectible accounts, Bad Debt Expense is debited when c. management estimates the amount of uncollectibles. Under the allowance method, the company will make estimates of the amount of bad debts incurred during the year.