On 31 December 2014 Mayo Resources Decided That It Needed

question 34

Multiple Choice

On 31 December 2014 Mayo Resources decided that it needed finally to write off as a bad debt a receivable of $4400 (including $400 GST) from Jayne Pty Ltd (in liquidation) . If Mayo Resources uses the allowance method, the entry to achieve the write off is which of the following?

• A) Debit bad debts expense $4400; credit GST collections $400; credit accounts receivable $4000
• B) Debit allowance for doubtful debts $4000; credit bad debts expense $4000
• C) Debit bad debts expense $4400; credit accounts receivable $4400
• D) Debit allowance for doubtful debts $4000, debit GST collections $400; credit accounts receivable $4400

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