Question

direct write-off method lo p1solstice company determines on october 1 that it cannot collect $52,000 of its accounts receivable from its customer, p. moore. apply the direct write-off method to record this loss as of october 1.

Answer 1

To apply the direct write-off method for Solstice Company's uncollectable $52,000 accounts receivable from P. Moore, a debit to Bad Debts Expense and a credit to Accounts Receivable would be recorded.

Step-by-step explanation:

When a company determines that an account receivable is uncollectable, the direct write-off method requires the company to write off the debt directly against income at the time it determines the account to be uncollectable. In the case of Solstice Company realizing it cannot collect $52,000 from P. Moore on October 1, the journal entry to record this loss would involve debiting the Bad Debts Expense account and crediting the Accounts Receivable account for P. Moore.

The journal entry would look like this:

• Debit Bad Debts Expense $52,000
• Credit Accounts Receivable - P. Moore $52,000

This entry reflects the charge to the income statement for the amount that is no longer expected to be collected, and reduces the balance on the accounts receivable accordingly.