Question

Pogo Products Inc. reported an opening balance in the allowance for doubtful accounts of $564,000. During the year, the company determined that a $30,000 receivable due from Shimmer Company was uncollectible. Prepare the journal entry to write off the Shimmer account assuming that Pogo uses the allowance method.

Answer 1

Answer: Debit Allowance for doubtful accounts $30,000; Credit Accounts receivable (Shimmer Coy) $30,000.

Explanation: The entries in the answer section above assumes that Pogo Products Inc. already made a provision for this uncollectible amount and it was warehoused in the opening balance - part of the $564,00 given in the question.

Determining a certain amount of the receivable as uncollectible signifies a write-off - meaning the portion of the receivable that is deemed uncollectible.

The entries, therefore, seek to extinguish the existing receivables relating to Shimmer Company against the allowance for doubtful accounts.