When the Direct Write Off Method Is Used, What Is

question 44

Multiple Choice

When the direct write off method is used, what is the general journal entry to write off bad debts?

• A) Debit allowance for doubtful debts; credit accounts receivable
• B) Debit bad debts expense; credit accounts receivable
• C) Debit accounts receivable; credit bad debts expense
• D) Debit accounts receivable; credit allowance for doubtful debts

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Definitions:

Merchandise Return

Goods returned by the buyer to the seller after purchase due to defects, dissatisfaction, or other reasons, often resulting in a reversal or adjustment of the initial sale transaction.

Sales Tax

A government-imposed tax on sales of goods and services, paid by the purchaser and collected by the seller.

Credit Customer

A customer who purchases goods or services on credit, paying at a later date rather than at the time of sale.

Payment Terms

The conditions under which a seller will complete a sale. Typically, these terms specify the period allowed to a buyer to pay off the amount due and may include cash discounts for timely payment.