Final answer:
When a company determines that it is unlikely to collect the outstanding balance of a customer account, it may write off the account as a bad debt. To record the write-off of Leer Company account, the company should determine the amount to be written off, debit the Bad Debt Expense and Allowance for Doubtful Accounts accounts, and credit the Accounts Receivable account.
Step-by-step explanation:
When a company determines that it is unlikely to collect the outstanding balance of a customer account, it may decide to write off the account as a bad debt. This means that the company removes the account receivable from its books and recognizes it as an expense in the income statement. When recording the write-off of Leer Company account, the following steps can be taken:
- Determine the amount to be written off based on the remaining balance of the account.
- Debit the Bad Debt Expense account to recognize the expense.
- Debit the Allowance for Doubtful Accounts account to reduce the provision for bad debts.
- Finally, credit the Accounts Receivable account to remove the outstanding balance.
By following these steps, the company can accurately reflect the impact of the uncollectible account on its financial statements.