Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / There are two methods for accounting for uncollectible accounts receivable, direct write-off and the allowance method
There are two methods for accounting for uncollectible accounts receivable, direct write-off and the allowance method. Under the allowance method, the write-off of a specific accounts receivable: Please add checkmark next to the correct answer(s); 1 decreases net income and decreases accounts receivable. 2 decreases net income and decreases working capital. 3 affects neither net income nor accounts receivable. 4 affects neither net income nor working capital. 5 increases bad debt expense and increases the allowance for doubtful accounts.
The answer is 5. increases bad debt expense and increases the allowance for doubtful accounts.
Example,
The journal entry would be
Bad Debt Expense A/c Dr XXX
Allowance for doubtful accounts Cr XXX
