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:________.
a. Accounts Receivable. A-Hopkins 2000
Allowance for Doubtful Accounts 2000
b. Allowance for Doubtful Accounts 2000
Bad debts expense 2000
c. Accounts Receivable A-hopkins 2000
Bad debts expense 2000
d. Accounts Receivable A Hopkins 2000
Allowance for Doubtful Accounts 2000
e. Allowance for Doubtful Accounts 2000
Accounts receivables A-Hopkins 2000

Answer 1

Answer:

e. Debit Allowance for Doubtful Accounts $2,000

Credit Accounts receivables A-Hopkins $2,000

Explanation:

When a company use the allowance method of accounting for uncollectible accounts, the company would actively review and book bad debt expenses for any debt in doubt of collection. The entry would be; Debit Bad debt expenses, Credit Allowance for doubtful debt

However, where there is sufficient evidence that these debts goes into default, no more expenses would be recorded , instead

Dr. Allowance for doubtful debt $2,000

Cr. Account receivable $2,000

(To record written off receivables)