Question

What is the normal journal entry for recording a loss on impairment under the allowance method?

a) debit accounts receivable, credit allowance for expected credit losses
b) debit allowance for expected credit losses, credit loss on impairment
c) debit loss on impairment, credit allowance for expected credit losses
d) debit allowance for expected credit losses, credit accounts receivable

Answer 1

The normal journal entry for recording a loss on impairment under the allowance method is to debit loss on impairment and credit allowance for expected credit losses.

Step-by-step explanation:

The normal journal entry for recording a loss on impairment under the allowance method is:

Debit loss on impairment

Credit allowance for expected credit losses

This entry reflects the recognition of the loss on impairment, which is debited to the loss on impairment account, and the corresponding reduction in the allowance for expected credit losses, which is credited to the allowance for expected credit losses account.