[Q1] The entity concludes that $1,200 of its accounts receivable cannot be collected in the future, because the customer liquidated the business.
Prepare a journal entry to record this transaction.
[Journal Entry]
| Debit | Credit | |
| Allowance for doubtful accounts | 1,200 | |
| Accounts receivable | 1,200 |
[Notes]
Debit: Decrease in allowance for doubtful accounts
Credit: Decrease in accounts receivable
Write-off of accounts receivable decreases the balance of accounts receivable and the corresponding balance of allowance for doubtful accounts.