Question

PRINTER Question 6 Under the allowance method for uncollectible accounts, allowance for doubtful accounts increases, while accounts receivables decrease when writing off an uncollectible account. the entry to write off an uncollectible account only involves statement of financial position accounts. bad debt expense increases, while allowance for doubtful accounts decreases when writing off an uncollectible account. KD bad debts expense is not recorded until a customer defaults.

Answer 1

Under the allowance method for uncollectible accounts the entry to write off an uncollectible account only involves statement of financial position accounts.

Second option is correct option.

Under the allowance method, the entry to write off an uncollectible account is as under:

General Journal	Debit	Credit
Allowance for doubtful accounts	--------
Accounts receivables		---------

Allowance for doubtful accounts is a contra asset account which is subtracted from accounts receivables in the balance sheet. Thus, this entry effects only financial position accounts, No income statement is involved when a write off is made under the allowance method.

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