BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 9, Problem 9.5EX
Textbook Problem

Entries to write off accounts receivable

Quantum Solutions Company, a computer consulting firm, has decided to write off the $33,550 balance of an account owed by a customer, Alliance Inc. Journalize the entry to record the write-off, assuming that (a) the direct write-off method is used and (b) the allowance method is used.

Expert Solution

(a)

To determine

Direct write-off method:

This method does not make allowance or estimation for uncollectible accounts, instead this method directly write-off the actual uncollectible accounts by debiting bad debt expense and by crediting accounts receivable. Under this method, accounts would be written off only when the receivables from a customer remain uncollectible.

Allowance method:

It is a method for accounting bad debt expense, where amount of 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.

To record: The journal entry in the books of Company Q, to write-off the account of Incorporation A, under direct-write off method.

Explanation of Solution

Prepare the journal entry in the books of Company Q, to write-off the account of Incorporation A, under direct-write off method.

Date Particulars Debit Credit
  Bad debt expense $33,550  
       Account receivable – Incorporation A ...
Expert Solution

(b)

To determine

To record: The journal entry in the books of Company Q, to write-off the account of Incorporation A, under allowance method.

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Chapter 9 Solutions

Accounting
Show all chapter solutions
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