Charles and Charms, a Merchandiser, Has an Account Receivable for $125

question 59

Multiple Choice

Charles and Charms, a merchandiser, has an account receivable for $125 which they now decided to be uncollectible. The merchandiser uses the direct write-off method. Which of the following entries is required to record the write-off?

• A) \[\begin{array} { | c | r | r | }
• \hline \text { Bad Debts Expense } & 125 & \\
• \hline \text { Accounts Receivable } & & 125 \\
• \hline
• \end{array}\]
• B) \(\begin{array}{c}
• \begin{array}{|l}
• \hline \text {Cash}\\
• \hline \text {Accounts Receivable}\\
• \hline
• \end{array}
• \begin{array}{|l}
• \hline125\\
• \hline\\
• \hline
• \end{array}
• \begin{array}{|l|}
• \hline\\
• \hline125\\
• \hline
• \end{array}
• \end{array}\)
• C) \[\begin{array} { | c | r | r | }
• \hline \text { Allowance for Bad Debts } & 125 & \\
• \hline \text { Accounts Receivable } & & 125 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | c | r | r | }
• \hline \text { Accounts Receivable } & 125 & \\
• \hline \text { Bad Debts Expense } & & 125 \\
• \hline
• \end{array}\]

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Definitions:

Outstanding Checks

Checks that have been written and recorded in the payer's ledger but have not yet been cashed or processed by the recipient's bank.

Checks Presented

Refers to the cheques that have been submitted for payment by the payee to the bank but have not yet been cleared.

Checks Written

The act of creating checks as payments for expenses, purchases, or obligations by a business or individual.

Bank Reconciliation

The process of matching and comparing figures from banking statements with those in a company’s financial records to ensure accuracy.