Question

Shown below are several accounts from a company's ledger with each account preceded by an identification number, and a transaction completed by this company. Indicate the number corresponding to the account debited and the number corresponding to the account credited when journalizing this transaction.

1. Accounts payable
2. Accounts receivable
3. Allowance for doubtful accounts
4. Bad debt expense
5. Cash
6. Factoring Fee Expense
7. Interest earned
8. Interest expense
9. Interest receivable
10. Notes payable
11. Notes receivable
12. Sales

Transaction - Wrote off an account using the allowance method. The number corresponding to the account debited is _____________ and the number corresponding to the account credited is _______________.

Answer 1

In the transaction of writing off an account using the allowance method, the Allowance for doubtful accounts (3) is debited and Accounts receivable (2) is credited.

Step-by-step explanation:

When a company writes off an account using the allowance method, two accounts in the company's ledger are affected. The account debited is the Allowance for doubtful accounts, which is a contra-asset account that reduces the balance of accounts receivable to reflect customers' accounts that are expected to be uncollectible.

The account credited is the Accounts receivable account, which is reduced to remove the specific customer's balance that has been deemed uncollectible. In this case, the number corresponding to the account debited is 3 (Allowance for doubtful accounts), and the number corresponding to the account credited is 2 (Accounts receivable).