Question

On April 4, a $2,000 account receivable from J. P. Moore has been determined to be uncollectible. Using the direct write-off method, the entry to write off the account would include a _________.

a. debit to Bad Debt Expense.b. debit to Accounts Receivable—J. P. Moore.c. credit to Cash.d. debit to Cash.

Answer 1

a. debit to Bad Debt Expense

Step-by-step explanation:

Under the direct write-off method we do not account for the allwoance of doubful accounts, We directly recognize the bad debt expense when a write.off is perform. This is the main difference with the allowance method as this never recognize bad debt expense when doing this.

This method generates a violation of the accounting principles as sales of previous accounting period have impact in the current accounting period. The expenses are not associate with the time they occur.