Chapter 8, Problem 15E

COLLECTION OF ACCOUNTS WRITTEN OFFALLOWANCE METHOD Julia Alvarez, owner of Alvarez Rentals, uses the allowance method in accounting for uncollectible accounts. Record the following transactions in general journal form:

For each of the transactions, state which special journal (sales journal, cash receipts journal, cash disbursements journal, purchases journal, or general journal) and which subsidiary ledger (Accounts Receivable, Accounts Payable, or neither) would be used in recording the transaction. A. Paid utility bill B. Sold inventory on account C. Received but did not pay phone bill D. Bought inventory on account E. Borrowed money from a bank F. Sold old office furniture for cash G. Recorded depreciation H. Accrued payroll at the end of the accounting period I. Sold inventory for cash J. Paid interest on bank loan

Each time an account is written off under the direct write-off method, Bad Debt Expense is debited.

Indicate whether each statement best describes the allowance (A) method or the direct write-off (DW)method. When an account is written off, the debit is to Bad Debts Expense.

If the allowance method of accounting for uncollectible receivables is used, what general ledger account is credited to write off a customer's account as uncollectible? a.Interest expense b.Allowance for doubtful accounts c.Uncollectible accounts expense d.Accounts receivable