SRM Company uses the allowance method to record its bad debt expense.When the account of a particular customer is deemed to be uncollectible and is written off,which of the following will be included in the journal entry?
A)debit to bad debt expense.
B)credit to bad debt expense.
C)debit to allowance for doubtful accounts.
D)debit to trade receivables.

Question

Quizplus · Accepted Answer

When an account is deemed uncollectible and is written off, the journal entry should include a debit to allowance for doubtful accounts, as it reduces the allowance account and reflects an increase in bad debt expense. There is no need for a debit to bad debt expense or trade receivables at this point. A credit to bad debt expense would be required if the company was recording an estimate for bad debts, but not for the write-off of a specific account.

SRM Company Uses the Allowance Method to Record Its Bad