On February 1 a customers account balance of 3500 was deemed

On February 1, a customer\'s account balance of $3,500 was deemed to be uncollectible. What entry should be recorded on February 1 to record the write-off assuming the company uses the allowance method?

Multiple Choice

Debit Allowance for Doubtful Accounts $3,500; credit Accounts Receivable $3,500.

Debit Accounts Receivable $3,500; credit Allowance for Doubtful Accounts $3,500.

Debit Bad Debts Expense $3,500; credit Allowance for Doubtful Accounts $3,500.

Debit Bad Debts Expense $3,500; credit Accounts Receivable $3,500.

Debit Allowance for Doubtful Accounts $3,500; credit Bad Debts Expense $3,500.

Solution

Answer : Debit Allowance for Doubtful Accounts $3,500; credit Accounts Receivable $3,500.

Explanation : Under allowance method , when the amount of receivable is actualy identified as uncollectible then such amount is removed or deducted from Accounts Receivable by passing the below mentioned entry.