Millie's Draperies uses the allowance method of recording bad debts. On June 13, the company concluded that the $200 account balance of Jane Murphy should be written off as uncollectible. The entry to write off Murphy's account will be:

Question

Quizplus · Accepted Answer

The entry to write off an account under the allowance method involves reducing the Accounts Receivable by the amount of the uncollectible account and reducing the Allowance for Doubtful Accounts by the same amount. Therefore, the correct entry is:
Allowance for Doubtful Accounts $200
Accounts Receivable/Jane Murphy $200

Millie's Draperies Uses the Allowance Method of Recording Bad Debts