Monday, September 1, 2008

Direct Write off Method Journal Entry

When it is determined a customer will not make payment, the journal entry is to debit bad debt expense and credit accounts receivable.

Journal Entry Direct Write off Method

Uncollectible Accounts Expense DEBIT 500

Accounts Receivable CREDIT 500

While the direct write-off method is the simplest way of calculating bad debts expense, it is only used in real life when the amount of debt is small.

Accounting Examples about Bad Debt Expense:
Percent of Accounts Receivable Method for Estimating Bad Debts Expense
Percent of Sales Method to Calculate Debt Expense

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