Question

Pogo Products Inc. reported an opening balance in the allowance for doubtful accounts of $564,000. During the year, the company determined that a $30,000 receivable due from Shimmer Company was uncollectible. Prepare the journal entry to write off the Shimmer account assuming that Pogo uses the allowance method.

Answer 1

Answer:

Dr.  Allowance for doubtful accounts $30,000

Cr.  Account receivables                     $30,000

Explanation:

Allowance for doubtful accounts is an estimate of the receivables which are not expected to be received in future. It is an contra asset account and adjusted against the accounts receivable. On balance sheet Accounts receivable is reported after adjusting the value of allowance for doubtful accounts.

Write off is also adjusted in allowance for doubtful accounts by debiting the allowance for doubtful accounts and crediting the accounts receivables.