Question

Gideon Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Gideon Company wrote off the $2,000 uncollectible account of its customer, A. Hopkins. The entry or entries Gideon makes to record the write off of the account on May 3 is:______.
Accounts Receivable—A. Hopkins 2,000
Allowance for Doubtful Accounts 2,000
Allowance for Doubtful Accounts 2,000
Bad debts expense 2,000
Accounts Receivable—A. Hopkins 2,000
Bad debts expense 2,000
Cash 2,000
Accounts Receivable—A. Hopkins 2,000
Allowance for Doubtful Accounts 2,000
Accounts Receivable—A. Hopkins 2,000
Cash 2,000
Accounts Receivable—A. Hopkins 2,000

Answer 1

Answer:

DR Allowance for Doubtful Accounts                    2,000

CR Accounts Receivable—A. Hopkins                                            2,000

Explanation:

Because Gideon uses the allowance method, when a debt is written off, it will be written off from the allowance that was created for doubtful debts instead of directly to the bad debt account.

Accounts Receivable will be credited to show that it is decreasing and Allowance for Doubtful debt will be debited because expenses are debited when they increase.