Gideon Company Uses the Direct Write-Off Method of Accounting for Uncollectible

question 32

Multiple Choice

Gideon Company uses the direct write-off method of accounting for uncollectible accounts.On May 3,the Gideon Company wrote off the $2,000 uncollectible account of its customer,A.Hopkins.The entry or entries Gideon makes to record the write off of the account on May 3 is:

• A) \(\begin{array}{|l|r|r|}
• \hline \text { Accounts Receivable-A Hopkins } & 2,000 & \\
• \hline \text { Bad Debts Expense } & & 2,000 \\
• \hline
• \end{array}\)
• B) \(\begin{array}{|l|r|r|}
• \hline \text { Allowance for Doubtful Accounts } & 2,000 & \\
• \hline \text { Accounts Receivable-A Hopkins } & & 2,000 \\
• \hline
• \end{array}\)
• C) \(\begin{array}{|l|r|r|}
• \hline \text { Accounts Receivable-A Hopkins } & 2,000 & \\
• \hline \text { Cash } & & 2,000 \\
• \hline
• \end{array}\)
• D) \(\begin{array}{|l|r|r|}
• \hline \text { Bad Debts Expense } & 2,000 & \\
• \hline \text { Accounts Receivable-A Hopkins } & & 2,000 \\
• \hline
• \end{array}\)
• E) \(\begin{array}{|l|r|r|}
• \hline \text { Cash } & 2,000 & \\
• \hline \text { Accounts Receivable-A Hopkins } & & 2,000 \\
• \hline
• \end{array}\)

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Definitions:

Cost Effectiveness

An evaluation measure to determine how effectively a party is achieving its objectives relative to the costs incurred.

Human Involvement

Human involvement indicates the participation or role of individuals in a process or system, often highlighting the importance of human input and decision-making.

Special Journal

A type of accounting journal that is used for recording and categorizing a specific type of transaction which occurs frequently.

General Journal

A primary accounting record used to record all types of transactions except for those related to specific tasks, such as sales or purchases, which have their own journals.