At January 1, Davidson Services has the following balances: Davidson has the following transactions during January:
Credit sales of $80,000, collections of $76,000, and write-offs of $12,000.
Davidson uses the direct write-off method. At the end of January, the balance in Uncollectible accounts expense is:

Question

At January 1, Davidson Services has the following balances:  Davidson has the following transactions during January:
Credit sales of $80,000, collections of $76,000, and write-offs of $12,000.
Davidson uses the direct write-off method. At the end of January, the balance in Uncollectible accounts expense is:

Quizplus · Accepted Answer

The direct write-off method involves writing off accounts receivable as they are identified as uncollectible. This means that the uncollectible accounts expense will only increase when specific accounts are actually written off.

In this case, the company had credit sales of $80,000, collections of $76,000, and write-offs of $12,000. This means that $12,000 of accounts receivable were identified as uncollectible and written off during the month.

Therefore, the balance in Uncollectible accounts expense at the end of January will be equal to the write-offs of $12,000.

At January 1, Davidson Services Has the Following Balances