Question

Our company has an account receivable for $12,500 that we have now deemed uncollectible. We use the allowance method. Which of the following accounts would we debit to record the write-off?

1) Accounts Payable
2) Allowance for Doubtful Accounts
3) Accounts Receivable
4) Bad Debt Expense

Answer 1

To record the write-off of an uncollectible account receivable using the allowance method, the company would debit Allowance for Doubtful Accounts.

Step-by-step explanation:

When a company deems an account receivable as uncollectible, it needs to record the write-off in its books. In this case, since we use the allowance method, the company would debit Allowance for Doubtful Accounts to record the write-off. This is because the allowance for doubtful accounts is a contra asset account that represents the estimated amount of uncollectible receivables.