Applying the direct write-off method to account for uncollectibles Susan Knoll i

Question

Applying the direct write-off method to account for uncollectibles Susan Knoll is an attorney in Los Angeles. Knoll uses the direct write-off method to account for uncollectible receivables. At January 31, 2016, Knoll's accounts receivable totaled $18,000. During February, she earned revenue of $21,000 on account and collected $23,000 on account. She also wrote off uncollectible receivables of $1,050 on February 29, 2016. Requirements Use the direct write-off method to journalize Knoll's write-off of the uncollectible receivables. SOLUTION Requirement 1 Date Accounts and Explanation Debit Credit Feb. 29 Wrote off uncollectible accounts.

Explanation / Answer

In Direct write-off method , uncollectible account recievable is directly written of against income at the time when they are actually detrmined as bad debt. A journal entry is passed in which bad debts expense account is debited and account receivable account is credited.

Thus, following journal entry shall be passed

Date Particular Debit Credit Feb 29. Bad debts expenses A/c Dr. $1050 To Accounts recievable A/c $1050

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