A company uses the direct write-off method to account for uncollectible receivables. Which of the following is included in the entry to estimate the Uncollectible account expense?
A) A credit to the Allowance for uncollectible accounts
B) A debit to the customer's Account receivable
C) A debit to Uncollectible account expense
D) No entry is made to estimate uncollectible accounts

Question

Quizplus · Accepted Answer

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

A Company Uses the Direct Write-Off Method to Account for Uncollectible