Direct Write Off Method
Previously, we studied about, “ Allowance Method for Uncollectible Accounts ”, but, here we will concentrate on this important topic of Accounting i.e., Direct Write Off Method where we sold goods to our customer on Credit Basis and does not make provision or create an estimation or Allowance for Uncollectible Accounts . Under this method, the company does not make Adjusting Entry for allowance for doubtful Accounts at the end of Current Accounting Period. When it is sure that the company can not collect its collectibles or in other words Uncollectible Accounts Expense become Actual Bad Debts , then the company recognizes such Loss to their Financial Statements as Bad Debts Written Off and pass following Accounting Journal Entry in its Journal : Direct Write off Method Journal Entry ...