Uncollectible- Direct Write Off and Allowance

Question 1

When does the Direct Write Off method record bad debt expense? When can it be used?

Answer 1

• When a specific receivable is considered uncollectible

- When firm is unable to estimate uncollectible receivables reliably

Question 2

What are the two entries for recovery of accounts previously written off under allowance method?

Answer 2

• Dr. AR Cr. Allowance for Doubtful Accounts

- Dr. Cash Cr. AR