Under the direct write-off method,a customer who doesn't pay their bills is written off with what journal entry?
A) Debit Accounts receivable and credit Uncollectible account expense
B) Debit Uncollectible account expense and credit Cash
C) Debit Uncollectible account expense and credit Accounts receivable
D) Debit Lost revenue and credit Accounts receivable

Question

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Under the direct write-off method, a customer who doesn't pay their bills is written off by debiting Uncollectible account expense and crediting Accounts receivable. It is because the accounts receivable balance is no longer collectible and therefore needs to be removed from the balance sheet to reflect the company's financial position accurately. The uncollectible account expense reflects the cost incurred by the business due to the customer's default. Options A, B, and D are incorrect as they do not follow the accounting principles of matching expenses with revenues or correctly reflect the write-off of uncollectible accounts.

Under the Direct Write-Off Method,a Customer Who Doesn't Pay Their