Question

Obama Company has identified that Bill Clinton’s receivable account of $100 is uncollectible. What is the journal entry needed to write off the account under the allowance method? Allowance for Doubtful Accounts 100 Bad Debts Expense 100 Allowance for Doubtful Accounts 100 Accounts Receivable 100 Accounts Receivable 100 Bad Debts Expense 100 Bad Debts Expense 100 Accounts Receivable 100

Answer 1

Answer:

Allowance for Doubtful Accounts 100 Accounts Receivable 100

Explanation:

The allowance method first estimates an allowance for doubtful debts.When the company receives the actual figure of the amount that have gone wrong, it writes off the  trade receivable and utilizes the allowance provided for

When allowance is estimated

Bad Debts (debit)

Allowance for doubtful debts (credit)

When the  actual figure of the amount that have gone wrong is obtained

Allowance for doubtful debts (debit)

Account Receivable (credit)