Final answer:
To record the write-off of a non-paying customer using the allowance method, debit the Allowance for Doubtful Accounts and credit Accounts Receivable. This reflects the elimination of the receivable and adjusts the balance sheet without affecting the income statement or cash flow.
Step-by-step explanation:
When using the allowance method for accounting for uncollectible accounts, the entry to record the write-off of a specific, non-paying customer involves a debit to the Allowance for Doubtful Accounts and a credit to Accounts Receivable. This accounting entry does not impact the income statement since the bad debt expense was already estimated and recorded at an earlier time. Instead, it adjusts the balance sheet accounts to reflect the write-off. No actual cash is affected by this entry since the loss was anticipated and previously accounted for when the allowance was created.
The journal entry to record the write-off would be as follows:
- Debit Allowance for Doubtful Accounts
- Credit Accounts Receivable