Lowery Co. uses the direct write-off method of accounting for uncollectible accounts receivable. Lowery has a customer whose accounts receivable balance has been determined to likely be uncollectible. The entry to write off this account would be
A) debit Allowance for Doubtful Accounts; credit Accounts Receivable
B) debit Accounts Receivable; credit Notes Receivable
C) debit Bad Debt Expense; credit Allowance for Doubtful Accounts
D) debit Bad Debt Expense; credit Accounts Receivable

Question

Quizplus · Accepted Answer

The direct write-off method involves the recognition of bad debts as an expense at the point when the account is deemed uncollectible. Therefore, the entry to write off an account would involve debiting Bad Debt Expense and crediting Accounts Receivable. Option A involves debiting the Allowance account, which is not used in the direct write-off method. Option B involves crediting Notes Receivable which is not relevant to the situation. Option C involves crediting the Allowance account which is not used in the direct write-off method.

Lowery Co Uses the Direct Write-Off Method of Accounting for Uncollectible