Monday, 14 November 2022

When the allowance method is used, the allowance for doubtful accounts would decrease when a(n) Specific account receivable is collected

 When the allowance method is used, the allowance for doubtful accounts would decrease when a(n)
Specific account receivable is collected.
Account previously written off is collected.
Account previously written off becomes collectible.
Specific uncollectible account is written off. Correct


 You Answered Correctly!
This answer is correct. When the allowance method of recognizing bad debts is used, the entry to establish the allowance account is



Bad debts expense    xx    
     Allowance for bad debts         xx


The entry to write off a specific uncollectible account is



Allowance for bad debts    xx    
     AR         xx


Thus, the allowance is decreased when the account is written off.

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