562018 2. Gideon Company uses the allowance method of accounting for uncollectib

Question

562018 2. Gideon Company uses the allowance method of accounting for uncollectible accounts. On Gideon Company wrote off the $3,100 uncollectible account of its customer, A. Hopkins, t Maya,t entries Gideon makes to record the write off of the account on May 3 is: The er e 3,100 Accounts Receivable-A. Hopkins 3100 Allowance for Doubtful Accounts ? 3100 Allowance for Doubtful Accounts 3,100 Bad debts expense Accounts Receivable-A. Hopkins 3,100 Bad debts expense 3,100 Cash 3100 Accounts Receivable-A. Hopkins 3100 0 Allowance for Doubtful Accounts 3,100 Accounts Receivable-A. Hopkins 3100 Cash 3,100 Accounts Receivable-A. Hopkins 3,100

Explanation / Answer

Bad Debts: If the any organization have the some doubtful debts than that time only organization make the ] allowance for doubtful debt and charge the same to revenue with bad debt expenses. In this procedure there is no actual write off bad debts only there is creation of liability as allowance for doubtful debts. When the organization confirm the non receipt of the amount of account receivable than that time liability of allowance will debited and account receivable of the customer will credited. So, as per the aboe the entry will be passed as below, Journal Entries Date Account Title and explanation Debit Credit Allowance for Doutfull Accoutns $                     3,100 1       To Account Receivable - A. Hopkins $                       3,100 (To Record the write off the customer account) Answer = Option 4

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