What Is The Normal Journal Entry For Recording Bad Debt Expense Under The Allowance Method?
Multiple Choice Question | What Is The Normal Journal Entry For Recording Bad Debt Expense Under The Allowance Method?
The correct answer is (c) "Debit Bad Debt Expense, credit Allowance for Doubtful Accounts", as when we record the journal entry for Allowance For Doubtful Accounts, which is a Contra Asset Account, we debit our estimated expense account i.e., doubt debts account or uncollectible accounts expense account or bad debt expense account and credit allowance
for doubtful account or provision for doubtful accounts as a contra asset account against Accounts Receivable Account under the Allowance Method.
Actually, this entry is recorded on the basis of estimation under this allowance approach unlike direct write-off method in order to match revenues of the accounting period with expenses incurred to earn such revenues.
The correct answer is (c) "Debit Bad Debt Expense, credit Allowance for Doubtful Accounts", as when we record the journal entry for Allowance For Doubtful Accounts, which is a Contra Asset Account, we debit our estimated expense account i.e., doubt debts account or uncollectible accounts expense account or bad debt expense account and credit allowance for doubtful account or provision for doubtful accounts as a contra asset account against Accounts Receivable Account under the Allowance Method.
Actually, this entry is recorded on the basis of estimation under this allowance approach unlike direct write-off method in order to match revenues of the accounting period with expenses incurred to earn such revenues.
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