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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?
i got this answer:
Dr Allowance and Cr Receivables
But the book says that the answer is
Cr Receivables Dr Irrecoverable Debts expense
Why?Following a mid-year review of its aged receivables’ listing, Pluto Co identified three
irrecoverable debts totalling $630 which should be written off. One of the debts, for $150,
was already included in the allowance for receivables.
What accounting entries should Pluto Co make to write off the irrecoverable debts?
Also this questionThe answer is correct.
Although what you were doing would end up with the same final result, strictly irrecoverable debts should be debited to the irrecoverable debts expense account and then separately the allowance for receivables should be adjusted to get the balance needed at the end of the period (as I show in my free lectures).
Sorry to bother you, but ive got another question
Jupiter Co has been notified that a customer has been declared bankrupt. The company had previously included this customers’ balance within the allowance for receivables in a previous period.Which of the following is the correct double entry to account for this new information?
this one is from BPP textbook
and now its says that the correct double entry is Dr Allowance and Cr Receivables
is it a mistake or what?
Kaplan says the answer is Dr Irrecoverable Expense and Cr ReceivablesAs I wrote before, both would end up having the same result.
However strictly the correct entry is to Debit the Irrecoverable expense account and then separately reduce the allowance (the way that your Kaplan book did it).
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