Question

During a conversation with the credit manager, one of Tabor's sales representatives learns that a $1,342 receivable from a bankrupt customer has not been written off but was considered in the determination of the appropriate year-end balance of the Allowance for Bad Debts account balance. What is the effect of write-off on 2019 net incom

Answer 1

Dr Allowance for bad debt $1,342

Cr Accounts receivable $1,342

Step-by-step explanation:

Based on the information given there won't be NO effect of write-off on 2019 net income reason been that it has already been accounted for in the allowance for bad debt which was estimated for the year.

Therefore the Journal entry to record this transaction will be to Debit Allowance for bad debt with the amount of $1,342 and Credit Accounts receivable with the same amount which is $1,342.

Dr Allowance for bad debt $1,342

Cr Accounts receivable $1,342