Question

Shannon Corp. uses the aging method to account for bad debt expense. Shannon determines that a customer account of $10,000 should be written off as uncollectible. The write off of the account will include

Answer 1

The write off of the account should include a debit to the allowance for uncollectible accounts, and a credit for bad debt expense:

Account Debit Credit

Bad Debt Expense $10,000

Allowance for Uncollectible

Accounts $10,000

This is because under the aging method, when an account is actually written-off, it must be charged against the bad debt expense that was forecasted or anticipated earlier.