Question

Prior to recording the following. Elite Electronics, Incorporated, had a credit balance of $1,900 in its Allowance for Doubtful Accounts. Prepare journal entries for each transaction. Required: On August 31, a customer balance for $290 from a prior year was determined to be uncollectible and was written off

Answer 1

To write off an uncollectible customer balance from a prior year, a journal entry is made to adjust the Allowance for Doubtful Accounts. Debit the Allowance for Doubtful Accounts and credit Accounts Receivable.

Step-by-step explanation:

When a customer balance from a prior year is determined to be uncollectible and written off, it is necessary to record a journal entry to adjust the Allowance for Doubtful Accounts. In this case, the credit balance of $1,900 in the Allowance for Doubtful Accounts needs to be reduced by $290. The journal entry would be:

• Debit Allowance for Doubtful Accounts: $290
• Credit Accounts Receivable: $290

This entry decreases the amount reserved for doubtful accounts, reflecting the write-off of the uncollectible customer balance. The debit to the Allowance for Doubtful Accounts reduces its credit balance, while the credit to Accounts Receivable reflects the reduction in the receivables from the customer.