Question

Brady is hired in 2018 to be the accountant for Anderson Manufacturing, a private company. At the end of 2018, the balance of Accounts Receivable is $23,000. In the past, Anderson has used only the direct write-off method to account for bad debts. Based on a detailed analysis of amounts owed, Brady believes the best estimate of future bad debts is $7,800. 1. If Anderson continues to use the direct write-off method to account for uncollectible accounts, what adjustment, if any, would Brady record at the end of 2018?

Answer 1

No journal entry is required

Step-by-step explanation:

In the case of Direct write-off method, for recording the estimating future debts, no journal entry is required as in this method only bad debt expense is recorded which is shown below:

Bad debt expense A/c Dr XXXXX

To Account receivable A/c XXXXX

(Being the bad debt expense is recorded)

So, no journal entry is required for estimated amount or Allowance for doubtful Accounts