On 31 December 2019 Miner Resources decided to finally write off as a bad debt a receivable of $6600 (including $600 GST) from Underground Pty Ltd (in liquidation). If Miner Resources uses the allowance method, the correct entry to write off the debt is:

Question

Quizplus · Accepted Answer

Under the allowance method, the write-off of a bad debt involves debiting the Allowance for Doubtful Debts for the net amount (excluding GST) and debiting GST Payable for the GST component, then crediting the full amount (including GST) to Accounts Receivable. This reflects the removal of the receivable from the books and the adjustment for the GST previously claimed.

On 31 December 2019 Miner Resources Decided to Finally Write