Question

Gideon Company uses the allowance method of accounting for uncollectible accounts. On May 3, the Gideon Company wrote off the $3,500 uncollectible account of its customer, A. Hopkins. On July 10, Gideon received a check for the full amount of $3,500 from Hopkins. The entry or entries Gideon makes to record the write off of the account on May 3 is: A Accounts Receivable—A. Hopkins 3,500 Bad debts expense 3,500 Cash 3,500 Accounts Receivable—A. Hopkins 3,500 B Allowance for Doubtful Accounts 3,500 Accounts Receivable—A. Hopkins 3,500 C Cash 3,500 Accounts Receivable—A. Hopkins 3,500 D Accounts Receivable—A. Hopkins 3,500 Allowance for Doubtful Accounts 3,500 E Allowance for Doubtful Accounts 3,500 Bad debts expense 3,500

Answer 1

The allowance methodology records an estimate of debt within the same accounting amount because of the sale. for instance, if a firm uses two sales to calculate debt and sales were $100,000.

The quantity of $2,000 is going to be debited to debt expense with a corresponding credit to allowance for uncertain accounts. To record the write-off account, the allowance is going to be debited with a credit to the assets account. This methodology is assemblage compliant as a result of debt expense being recorded within the same amount because of the sale.

Allowance for doubtful accounts will be debited with a 2000

Accounts receivable-A Hopkins will be credited with 2000

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