Question

The Wayside Hotel uses the direct write-off method of accounting for bad debts. If the general manager of the hotel determines that a $700 debt is uncollectible and the current balance of Provision for Doubtful Accounts is $100, the journal entry to recognize this bad debt would involve

Answer 1

Crediting Account Receivable $700

Step-by-step explanation:

Crediting Account Receivable with $700

Because the $700 is UNCOLLECTIBLE which means they are debts which will not to be paid due to the inability to find the debtor or the debtors is bankrupt leading to decreased or reduction in the company ACCOUNT RECEIVABLES

Therefore Account Receivable can be said to mean the amount of cash or money that a company is expected to receive for services rendered or for providing goods and services to their customers on credit.

Example in a case where a cash payment is received from the debtor cash will definitely increased and the accounts receivable will eventually decreased or reduced.