Question

Assume that during 2024, a total of $4,275 Accounts Receivable has to be written off due to customers' inability to pay what they owe Quality Inc. What journal entry would be used to record this write-off of $4.275?

Answer 1

To record the write-off of $4,275 Accounts Receivable, you would make a journal entry that debits the allowance for doubtful accounts and credits the accounts receivable.

Step-by-step explanation:

When Quality Inc. writes off $4,275 of Accounts Receivable due to customers' inability to pay, the journal entry to record the write-off would involve debiting the Allowance for Doubtful Accounts and crediting the Accounts Receivable for the amount of $4,275. This action reflects the company's acceptance that these specific receivables will not be collected.

The journal entry would appear as follows:

Debit Allowance for Doubtful Accounts $4,275

Credit Accounts Receivable $4,275

This entry removes the receivable from the company's books and also reduces the allowance for doubtful accounts, without affecting the income statement since the bad debt expense was previously estimated and recorded.