Question

Avia company determines that a customer balance of $400 from allia, inc. is uncollectible. avia uses the allowance method to account for bad debts. the entry to write off the uncollectible balance will include a debit to:

a. cash
b. allowance for doubtful accounts
c. bad debts expense
d. accounts receivable - allia

Answer 1

The entry to write off the uncollectible balance of $400 from Allia, Inc. in the Avia company's books would include a debit to Accounts Receivable - Allia and a credit to Allowance for Doubtful Accounts.

Step-by-step explanation:

The entry to write off the uncollectible balance of $400 from Allia, Inc. in the Avia company's books would include a debit to Accounts Receivable - Allia. This is because the uncollectible balance represents an amount owed to Avia by Allia, Inc. which is no longer expected to be collected.

The entry would also include a credit to Allowance for Doubtful Accounts. The Allowance for Doubtful Accounts account is used to record an estimate of the potential bad debts and is debited when an account is deemed uncollectible. The entry would not involve a debit to Cash or Bad Debts Expense as no actual cash is received or expense incurred at the time of writing off the uncollectible balance.