Question

Creative Solutions Company, a computer consulting firm, has decided to write off the $11,750 balance of an account owed by a customer, Wil Treadwell.

Journalize the entry to record the write-off, assuming that the direct write-off method is used.

Answer 1

DR Bad Debts Expense $11,750

CR Accounts Receivable $11,750

(To record accounts receivable written off)

Explanation;

Direct method of writing off involves removing the bad debt directly from the Accounts Receivable account instead of using the Allowance for Doubtful debt account.