Question

If Ohio Company received $2,250 as partial payment on the $5,500 account of Carson Mueller Co. and wrote off the remaining balance as uncollectible, the only difference between recording the entry under the direct write-off method and the allowance method (assuming that an adequate allowance account had been set up) would bea.a debit to Bad Debt Expense for $3,250 under the direct method rather than a debit to Accounts Receivable for $3,250 under the allowance method.b.a debit to Bad Debt Expense for $3,250 under the direct method rather than a debit to Allowance for Doubtful Accounts for $3,250 under the allowance method.c.a credit to Accounts Receivable for $3,250 under the direct method rather than a credit to Allowance for Doubtful Accounts for $3,250 under the allowance method.d.a debit to Cash for $2,250 under the direct method rather than a credit to Cash for $2,250 under the allowance method

Answer 1

b.a debit to Bad Debt Expense for $3,250 under the direct method rather than a debit to Allowance for Doubtful Accounts for $3,250 under the allowance method

Step-by-step explanation:

a debit to Bad Debt Expense for $3,250 under the direct method rather than a debit to Accounts Receivable for $3,250 under the allowance method

FALSE if we debit A/R we are increasing it and the goal of the write-off is to reduce that account

b.a debit to Bad Debt Expense for $3,250 under the direct method rather than a debit to Allowance for Doubtful Accounts for $3,250 under the allowance method

CORRECT As the allowance will not recognize baddebt during a write-off it will only do it at year-end or end-of-.the-month adjusting entries.

c.a credit to Accounts Receivable for $3,250 under the direct method rather than a credit to Allowance for Doubtful Accounts for $3,250 under the allowance method

FALSE under both method we credit A/R as we need to decrease it to recognize the write-off

d.a debit to Cash for $2,250 under the direct method rather than a credit to Cash for $2,250 under the allowance method

FALSE The write-off will consider the remaining balance not the collected amount