Systems Understanding Aid Project

Transaction 12: Bad Debt Write-off

Received legal notification from Benson, Rosenbrook, and Martinson, P.C., attorneys at law, that Stevenson College had filed bankruptcy and will most likely be unable to pay any of its outstanding debts to its suppliers.

Write off the account as a bad debt

Note

Remember that Waren Sports Supply uses the "Allowance" method rather than "Direct write-off" for accounting for bad debts.

Journal Entries

Dec.23 Allowance for doubtful accounts 2900.00

Accounts receivable 2900.00

Knowing that balance forward is 1750.81 (Credit Balance)

Question:

What should we do? debit or credit 2900.00 to Allowance for doubtful accounts General Ledger,

What is the credit balance after posting the entry to the general ledger.