When an account becomes uncollectible and must be written off,

Question

Quizplus · Accepted Answer

When an account becomes uncollectible and must be written off, Accounts Receivable should be credited to remove the uncollectible amount from the accounts receivable balance. This is part of the allowance method, where previously, an estimate of bad debts was recorded as a debit to Bad Debt Expense and a credit to Allowance for Doubtful Accounts. The write-off adjusts the accounts without affecting the income statement further.

When an Account Becomes Uncollectible and Must Be Written Off