Question

Flynn Company uses an allowance method for recording uncollectibles. Flynn determined that $4,000 due from Mitchell will not be collected. The entry Flynn should record to write off the Mitchell account is:

a.Uncollectible Accts Expense 4,000
Accounts Receivable 4,000
b.Sales 4,000
Accounts Receivable 4,000
c.Uncollectible Accts Expense 4,000
Allow. for Uncollectible Accts 4,000
d.Allow. for Uncollectible Accts 4,000
Accounts Receivable 4,000

Answer 1

The correct entry to write off the uncollectible account using the allowance method is a debit to Allowance for Uncollectible Accounts and a credit to Accounts Receivable for $4,000.

Step-by-step explanation:

When Flynn Company determines that $4,000 due from Mitchell will not be collected, and they use the allowance method, the correct journal entry to record the write-off of Mitchell's account would involve debiting the Allowance for Uncollectible Accounts and crediting Accounts Receivable. This is because, with the allowance method, the expense was already recognized when the allowance was created, and now it is just allocating that allowance to a specific account receivable that has been deemed uncollectible.

The journal entry Flynn should record is:
Allow. for Uncollectible Accts 4,000
Accounts Receivable 4,000

This entry does not affect the income statement since the expense was previously recognized when the allowance was estimated. It only affects the balance sheet by reducing both the allowance account and accounts receivable, without additional impact on the income statement at the time of write-off.