Under the direct write-off method,which of the following is included in the entry to write off an uncollectible account?
A) a credit to the Allowance for Bad Debts
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

Under the direct write-off method, an uncollectible account is directly written off by decreasing the customer's account receivable with a credit entry. No entry is made to the allowance for bad debts account. Hence, option B is the correct answer. Option A (a credit to the Allowance for Bad Debts) is incorrect as this account is not used in the direct write-off method. Option C (a debit to Allowance for Uncollectible Accounts) is also incorrect because this account is used in the allowance method of accounting for bad debts, not the direct write-off method. Option D (No entry is made to write off uncollectible accounts) is incorrect as an entry is made to write off uncollectible accounts in the direct write-off method.

Under the Direct Write-Off Method,which of the Following Is Included