You have just received notice that a customer of yours with an Account Receivabl

ID: 2671404 • Letter: Y

Question

You have just received notice that a customer of yours with an Account Receivable balance of $100 has gone bankrupt and will not make any future payments. Assuming you use the allowance method, the entry you make is to

a. debit Bad Debt Expense and credit Allowance for Doubtful Accounts.
b. debit Bad Debt Expense and credit Accounts Receivable.
c. debit Allowance for Doubtful Accounts and credit Accounts Receivable.
d. debit Allowance for Doubtful Accounts and credit Bad Debt Expense

Allowance for Doubtful Accounts has a debit balance of $1,200 at the end of the year (before adjustment). The company prepares an analysis of customers' accounts and estimates the amount of uncollectible accounts to be $13,900. Which of the following adjusting entries is needed to record the Bad Debt Expense for the year?

a. debit Bad Debt Expense, $15,100; credit Allowance for doubtful Accounts, $15,100
b. debit Allowance for Doubtful Accounts, $15,100; credit Bad Debt Expense, $15,100
c. debit Allowance for Doubtful Accounts, $12,700; credit Bad Debt Expense, $12,700
d. debit Bad Debt Expense, $12,700; credit Allowance for Doubtful Accounts, $12,700

The Lowery Co. uses the direct write-off method of accounting for uncollectible accounts receivable. Lowery has a customer whose accounts receivable balance has been determined to likely be uncollectible. The entry to write off this account would be which of the following?:

a. debit Allowance for Doubtful Accounts; credit Accounts Receivable
b. debit Sales Returns and Allowance, credit Accounts Receivable
c. debit Bad Debt Expense; credit Allowance for Doubtful Accounts
d. debit Bad Debt Expense; credit Accounts Receivable

Explanation / Answer

1. B. debit Allowance for Doubtful Accounts and credit Accounts Receivable. 2. d 13900 - 1200 = 12700 debit Bad Debt Expense, $12,700; credit Allowance for Doubtful Accounts, $12,700 3.d debit Bad Debt Expense; credit Accounts Receivable Allowance for Doubtful Accounts is not used,When using the direct write-off method

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You have just received notice that a customer of yours with an Account Receivabl

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