Use this information for questions 7 - 10 During the next month, 31 July 20X2, an $27300 account receivable is written off as uncollectable. Prepare the journal entry to record the write-off. Ignore GST.

Question

BlackTom AI · Accepted Answer

Under the allowance method, to remove a specific account judged uncollectible you debit the contra-asset Allowance for Doubtful Debts and credit Accounts Receivable.

1) Relevant knowledge points and concepts
- Allowance for Doubtful Debts is a contra-asset that was established earlier by estimating bad debts (credit balance) so that actual write-offs do not hit current profit or loss again.
- A write-off removes the specific customer receivable from Accounts Receivable and reduces the Allowance (uses up the previously recorded estimate).
- The direct write-off (Bad Debt Expense Dr / Accounts Receivable Cr) would be used only if no allowance had been set up; under the allowance method the expense was already recognized when the allowance was created.

2) Step-by-step reasoning
- A $27,300 account has been determined uncollectible and must be removed from the receivables ledger.
- Reduce Accounts Receivable (credit) by $27,300 to remove the asset.
- Reduce the allowance reserve (debit the contra-asset) by $27,300 because the estimated provision is being applied to this specific write-off.

3) Journal entry (all intermediate amounts shown)
- Debit Allowance for Doubtful Debts $27,300
- Credit Accounts Receivable $27,300

4) Why this is correct
- The debit to Allowance reduces the contra-asset balance (consumes the prior estimate). The credit to Accounts Receivable removes the uncollectible balance. Net receivables (Accounts Receivable less Allowance) are unchanged by the write-off because the expense was recognized earlier when the allowance was created.

5) Why the other options are incorrect
- Accounts Receivable Dr $27,300; Allowance for Doubtful Debts Cr $27,300: This would reinstate a receivable (reverse a write-off), not record a write-off.
- Bad Debt Expense Dr $27,300; Accounts Receivable Cr $27,300: This records expense at the time of write-off (direct write-off method), which is inappropriate if an allowance already exists.
- Allowance for Doubtful Debts Dr $37,600; Accounts Receivable Cr $37,600: Wrong dollar amount.

Conclusion: The correct journal entry is Allowance for Doubtful Debts Dr $27,300; Accounts Receivable Cr $27,300, which matches the provided answer.

Use this information for questions 7 - 10 During the next month, 31 July 20X2, an $27300 account receivable is written off as uncollectable. Prepare the journal entry to record the write-off. Ignore GST.数值题

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