JournaldrillWriting off an account
A journal entry exercise from Journaldrill. Solve it with an account picker and debit and credit fields in your browser, and it is checked the moment you submit.
The task
Bluewater Marine uses the allowance method. It learns that a customer, Reed Charters, has closed its business, and it writes off Reed's $1,275 account balance as uncollectible.
What this exercise teaches
The $1,275 account is removed from Accounts Receivable and charged against the allowance. Bad Debt Expense was already recognized when the allowance was estimated, so it is not touched.
A hint if you get stuck
Under the allowance method a write-off uses up part of the allowance and removes the receivable; no expense is recorded now.
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