A company uses the direct write-off method to account for uncollectible receivables.Which of the following is included in the entry to write off an uncollectible account?
A) A credit to the Allowance for uncollectible accounts
B) A credit to the customer's Account receivable
C) A debit to Allowance for uncollectible-accounts
D) No entry is made to write off uncollectible accounts.

Question

Quizplus · Accepted Answer

The direct write-off method involves directly reducing the customer's account receivable when determining an uncollectible account. Therefore, the entry to write off an uncollectible account would involve a credit to the customer's account receivable. No entries are made to the allowance for uncollectible accounts using the direct write-off method. Option A is incorrect because a credit to the allowance for uncollectible accounts is not made under the direct write-off method. Option C is also incorrect because a debit to the allowance for uncollectible accounts is not made under the direct write-off method. Option D is incorrect because an entry is made to write off uncollectible accounts under the direct write-off method.

A Company Uses the Direct Write-Off Method to Account for Uncollectible