Question

Harp Brewing received a bankruptcy notice from their customer Jerry. Musing an allowance method, the entry to write-off his balance of $1,300 would be: Bad Debts Expense IST 300 Allowance for Doubtful Accounts Allowance for Doubtful Accounts $1,300 Accounts Receivable/Jerry $1.300 Accounts Receivable/Jerry 1$ 1.300 Bad Debts Expense $1.300 None of the above

Answer 1

Answer:

Allowance for Doubtful Accounts	$1,300
Accounts receivable/Jerry		$1,300

Explanations:

i. Adjusting Entry for Bad debt expense under 'Allowance method':

Account title	Debit	Credit
Bad debt expense	$1,300
Allowance for doubtful account		$1,300
[To record bad debt expense]

ii.Entry for Written off of Uncollectible Under 'Allowance method':

Account title	Debit	Credit
Allowance for Doubtful Accounts	$1,300
Accounts receivable/Jerry		$1,300
[To record written-off of uncollectibles]

iii. Entry for Written off of Uncollectible Under 'Direct write-off method:

Account title	Debit	Credit
Allowance for Doubtful Accounts	$1,300
Bad debt expense		$1,300
[To record written-off of uncollectibles]

.

Hence option-ii correct.