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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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Chapter
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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

Under the allowance method, when an account is determined to be worthless, the journal entry to write off the account will include a

  1. (a) debit to Allowance for Doubtful Accounts.
  2. (b) debit to Bad Debt Expense.
  3. (c) credit to Allowance for Doubtful Accounts.
  4. (d) debit to Accounts Receivable.

To determine

Find the correct option.

Explanation

Allowance method:

It is a method for accounting bad debt expense, where uncollectible accounts receivables are estimated and recorded at the end of particular period. Under this method, bad debts expenses are estimated and recorded prior to the occurrence of actual bad debt, in compliance with matching principle by using the allowance for doubtful account.

Write-off:

Write-off refers to deduction of a certain amount from accounts receivable, when it becomes uncollectible.

Example:

Prepare journal entry to write off accounts under allowance method:

DateParticularsPost...

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