Question

on february 1, a customer's account balance of $3,700 was deemed to be uncollectible. what entry should be recorded on february 1 to record the write-off assuming the company uses the allowance method?

Answer 1

Entry should be recorded on February 1 under allowance method is

Credit Accounts Receivable $3,700; debit Allowance for Doubtful Accounts $3,700.

When a receivable's value is really determined to be uncollectible under the allowance method, the amount is subtracted from Accounts Receivable by making the entry listed below. The allowance technique compares the sales to the projected costs or losses from uncollectible receivables. Our accounts receivable are listed on the balance sheet. This amount is frequently wrong because we probably won't be able to collect all of them. One or both of the following approaches can be used to apply the allowance method: concentrating on the necessary bad debt expense for the income statement. concentrating on the required amount for the allowance for doubtful accounts (which will be reported on the balance sheet)

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