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Q: G Co has been notified that a customer has been declared bankrupt. G Co had previously made allowance for this receivable.
Which of the following is the correct double entry?The answer says the double entry is DR Irrecoverable debts account CR Receivables Ledger control account.
It says that G Co had previously made allowance for this receivable so shouldn’t the correct double entry be DR Allowance for Receivable CR Receivables Ledger Control Account, because if there is an allowance that means that the expense is already in the irrecoverable debt expense account so why does the answer say otherwise?
In fact, as I explain in my lectures, you could debit either irrecoverable debts expense or you could debit the allowance (I explain the lectures why the end result would be the same).
It is easier and more efficient to debit irrecoverable debts however.
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