Asked by arjun trivedi on Jul 21, 2024
Verified
When using the allowance method of accounting for uncollectible accounts,the entry to write off Jeannie's uncollectible account is a debit to Allowance for Doubtful Accounts and a credit to Accounts Receivable-Jeannie.
Allowance for Doubtful Accounts
An accounting provision made by companies to account for potential future bad debts, reflecting credit sales that might not be collected.
Write Off
The accounting action of declaring that an asset is no longer useful and recording its depreciation in the financial statements.
- Identify the significance and operation of the allowance approach when dealing with bad debts in accounting.
Verified Answer
RD
Rinkle DhillonJul 28, 2024
Final Answer :
True
Explanation :
This entry reduces the Allowance for Doubtful Accounts, which is a contra asset account, and also reduces the Accounts Receivable balance specifically for Jeannie, without affecting the income statement at the time of the write-off.
Learning Objectives
- Identify the significance and operation of the allowance approach when dealing with bad debts in accounting.
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