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 toA. 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

Question

Jewels

Business

31 March, 11:52

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 toA. 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

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Answers (1)

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Lewis Kidd · Answer 1

C. debit Allowance for Doubtful Accounts and credit Accounts Receivable.

Explanation:

In the Allowance Method, the company register an entry at the end of the accounting period as an anticipate of Bad Debt, the entry is debit a Bad Debt Expense and a credit in the Allowance for Doubtful Accounts, when a client's credit it's write-off as uncollectible the company use the Allowance for Doubtful Accounts recorded to compensate the amount of the customer's bankrupt.