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

question 64

Short Answer

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

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

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Definitions:

Revenues And Profits

Financial terms where 'revenues' refer to the total income generated from normal business operations, and 'profits' signify the remaining income after all expenses have been deducted.

Intermediate Court

A level of court between the lower courts and the highest courts, typically involved in hearing appeals from decisions of lower courts.

Jointly And Severally Liable

A legal term describing a situation where two or more parties can be held responsible individually or together for a debt or liability.

General Partners

Partners in a partnership who have full liability for the debts of the partnership and are involved in the management of the business.