A Company Uses the Direct Write-Off Method

question 176

Multiple Choice

A company uses the direct write-off method.The company writes off a $3,000 customer account balance when it becomes clear that the particular customer will never pay.What is the journal entry that would be prepared to record this write-off?

• A)Debit Bad Debt Expense and credit Accounts Receivable for $3,000.
• B)Debit Allowance for Doubtful Accounts and credit Bad Debt Expense for $3,000.
• C)Debit Bad Debt Expense and credit Allowance for Doubtful Accounts for $3,000.
• D)Debit Accounts Receivable and credit Bad Debt Expense for $3,000.

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Definitions:

Lower Bound

The minimum value that a mathematical function, financial security, or market variable can have.

Call's Value

Represents the price of an option to buy a particular stock or asset at a set price within a specific time frame.

ESOs

Employee Stock Options; the right granted to employees to buy a set amount of company shares at a fixed price.

Job Leaving

This refers to the act of an employee voluntarily terminating their employment with a company.