On February 1, a customer\'s account balance of $3,500 was deemed to be uncollec
ID: 2396854 • Letter: O
Question
On February 1, a customer's account balance of $3,500 was deemed to be uncollectible. What entry should be recorded on February 1 to record the write-off assuming the company uses the allowance method?
Multiple Choice
Debit Allowance for Doubtful Accounts $3,500; credit Accounts Receivable $3,500.
Debit Accounts Receivable $3,500; credit Allowance for Doubtful Accounts $3,500.
Debit Bad Debts Expense $3,500; credit Allowance for Doubtful Accounts $3,500.
Debit Bad Debts Expense $3,500; credit Accounts Receivable $3,500.
Debit Allowance for Doubtful Accounts $3,500; credit Bad Debts Expense $3,500.
Explanation / Answer
Answer : Debit Allowance for Doubtful Accounts $3,500; credit Accounts Receivable $3,500.
Explanation : Under allowance method , when the amount of receivable is actualy identified as uncollectible then such amount is removed or deducted from Accounts Receivable by passing the below mentioned entry.
Accounts Titles Debit ($) Cedit ($) Allowance for Doubtful Accounts 3,500 Accounts Receivable 3,500Related Questions
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