Question

At the end of 2016, Concord Corporation has accounts receivable of $704,700 and an allowance for doubtful accounts of $26,850. On January 24, 2017, it is learned that the company’s receivable from Madonna Inc. is not collectible and therefore management authorizes a write-off of $4,384. repare the journal entry to record the write-off.

Answer 1

Answer:

The journal entry to record the write off is :

Allowance for doubtful accounts Debit              $ 4,384

Accounts Receivables                  Credit                                  $ 4,384

Explanation:

Write offs of account receivables can either be done under the direct method or through an allowance for uncollectible account.

in the direct method, any bad debts is directly written off by a debit to the bad debts expense and accounts receivable is credited.

In entities, which follow the allowance account, a percentage of sales is normally credited to the allowance account with the debit to the bad debts accounts. All receivable balances written off are then recorded as per the above journal entry.