Question

Knowledge Check 01 On December 31, after making a concerted effort, management determines that it will not be able to collect the $1,200 owed to it by its customer Acme, Inc. The company uses the direct write-off method to account for uncollectible accounts. Prepare the necessary journal entry by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.

Answer 1

Answer and Explanation:

The journal entry is given below:

Bad debt expense $1,200

To Accounts Receivable- Acme Inc. $1,200

(Being the bad debt expense is recorded)

Here the bad debt expense is debited as it increased the expense and credited the account receivable as it decreased the assets

The same is relevant