BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

Solutions

Chapter
Section
BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
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.

(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

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 ...

(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.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Who are some of the basic users of financial statements, and how do they use them?

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

How accurately can managers plan for future human resources needs?

Foundations of Business (MindTap Course List)

Explain why transferred-in costs are a special type of raw materials for the receiving department.

Managerial Accounting: The Cornerstone of Business Decision-Making

CAPM AND REQUIRED RETURN HR Industries (HRI) has a beta of 1.8, while LR Industries (LRI) beta is 0.6. The risk...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)