When a company is using the direct write-off method, and an account is written off, the journal entry consists of a:

Question

Quizplus · Accepted Answer

When using the direct write-off method, an account is written off by debiting the Bad Debts Expense account and crediting the Accounts Receivable account. Therefore, the correct answer is B, credit to Accounts Receivable and a debit to Bad Debts Expense. Option A is incorrect because it suggests a cash payment, which is not the case with the direct write-off method. Option C is incorrect as it refers to the allowance method, not the direct write-off method. Option D is incorrect because it mentions interest expense, which is not relevant to the direct write-off method.

When a Company Is Using the Direct Write-Off Method, and an Account