Under the direct write-off method, the entry to estimate the bad-debt expense includes a:
A)debit to the customer's account receivable.
B)credit to allowance for doubtful accounts.
C)debit to bad-debt expense.
D)No entry is made to estimate uncollectible accounts.

Question

Quizplus · Accepted Answer

Under the direct write-off method, companies do not estimate bad debt expense in advance. Instead, they recognize bad debts at the point they determine an account is uncollectible, meaning no entry is made to estimate uncollectible accounts in advance.

Under the Direct Write-Off Method, the Entry to Estimate the Bad-Debt