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The Direct Write-Off Method

17 February, 2016 - 16:29

The direct write-off method only records an uncollectible account expense when an account has been determined to be uncollectible. This method is not recommended the recognition of the expense does always occur in the year the corresponding revenues were recorded. It has, however, the advantage of simplicity since no adjusting entry is necessary at the end of a financial period. The method is best used by businesses that do not have a large number of credit sales. In the event an account needs to be reinstated, the Accounts Receivable account is debited. Uncollectible Accounts Expense should be credited.

 

Journal entry to write off bad debts
 

  Debit Credit  
Uncollectible Accounts Expense XX  
Accounts Receivable     XX
 
Journal entry to recover receivables
 
  Debit   Credit 
Accounts Receivable XX  
Uncollectible Accounts Expense     XX