Question

flynn company determines that it cannot collect $7,200 of its accounts receivable from its customer, mdc. record the journal entry required of flynn under (a) the direct write - off method and (b) the allowance method. view transaction list journal entry worksheet record the write off under the direct write - off method. note: enter debits before credits. transaction general journal debit credit a

Explanation:

Step1: Direct - write off method concept

When using the direct - write off method, we directly write off the uncollectible accounts as an expense.
Debit Bad Debt Expense and credit Accounts Receivable.
Bad Debt Expense increases (debit) and Accounts Receivable decreases (credit).

Transaction	General Journal	Debit	Credit
	Accounts Receivable		$7,200

Step2: Allowance method concept

Under the allowance method, we use an allowance account.
Debit Allowance for Doubtful Accounts and credit Accounts Receivable.
The Allowance for Doubtful Accounts is a contra - asset account that reduces Accounts Receivable.

Transaction	General Journal	Debit	Credit
	Accounts Receivable		$7,200

Answer:

Transaction	General Journal	Debit	Credit
	Accounts Receivable		$7,200
b (Allowance method)	Allowance for Doubtful Accounts	$7,200
	Accounts Receivable		$7,200