Christo Uses the Allowance Method of Accounting for Bad and Doubtful

question 65

Multiple Choice

Christo uses the allowance method of accounting for bad and doubtful debts. When he received notice that Debtor 3459, who owed him $10 000, was in liquidation he decided to write off the debt as bad. What is the general journal entry to record the write off?

• A) Debit bad debts expense $10 000; credit allowance for doubtful debts $10 000
• B) Debit allowance for doubtful debts $10 000; credit accounts receivable $10 000
• C) Debit bad debts expense $10 000; credit accounts receivable $10 000
• D) Debit allowance for doubtful debts $10 000; credit bad debts expense $10 000

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Definitions:

Full Time

Employment status characterized by working a minimum number of hours defined by the employer, typically 35-40 hours per week.

Division of Income

The distribution of a company's earnings among various stakeholders, such as dividends for shareholders or reinvestment into the business.

Half Time

A term typically associated with employment or academic status, indicating a work or study load that is half of what is considered full time.

Ratio

A quantitative relationship between two numbers, showing how many times one value contains or is contained within the other.