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When a company is using the direct write-off method, and an account is written off, the journal entry consists of a: uncollectible account.
The entry to put in writing off the bad account under the direct write-off method is: Debit Bad Debts Expense (to report the quantity of the loss on the company's income statement) Credit assets (to remove the number that may not be collected).
Under the direct write off method, when a little business determines an invoice is uncollectible they will debit the Bad Debts account and credit assets immediately. This eliminates the revenue recorded likewise because the outstanding balance owed to the business within the books.
Using the direct write-off method, your business reports the complete amount of what customers owe when a credit sale is created. This is often spoken as an asset. But if your company were to possess uncollectible assets, the number in assets would be too high.
Direct write-off method. The direct write-off method involves writing off a foul debt expense directly against the corresponding receivable account. Therefore, under the direct write-off method, a particular dollar amount from a customer account is written off as a nasty debt expense.
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