Question

Under the allowance method of recording bad debts, which of the following entries, if any, would be made to write off actual uncollectible accounts of $5,500?

a) Debit Bad Debt Expense $5,500, Credit Allowance for Doubtful Accounts $5,500
b) Debit Allowance for Doubtful Accounts $5,500, Credit Bad Debt Expense $5,500
c) Debit Accounts Receivable $5,500, Credit Allowance for Doubtful Accounts $5,500
d) Debit Allowance for Doubtful Accounts $5,500, Credit Accounts Receivable $5,500
e) No entry is required for the write-off.

Answer 1

The correct entry to write off actual uncollectible accounts of $5,500 under the allowance method of recording bad debts is to debit Bad Debt Expense $5,500 and credit Allowance for Doubtful Accounts $5,500. The correct option is: a).

Step-by-step explanation:

The correct entry to write off actual uncollectible accounts of $5,500 under the allowance method of recording bad debts is:

• Option a) Debit Bad Debt Expense $5,500, Credit Allowance for Doubtful Accounts $5,500

When an account is deemed uncollectible, the Bad Debt Expense account is debited to reflect the loss, and the Allowance for Doubtful Accounts account is credited to reduce its balance. This entry recognizes the expense of the uncollectible debt and reduces the amount of money the company expects to collect from customers.