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One method of recording the bad debts is referred to as the direct write off method which involves removing the specific uncollectible amount from accounts receivable and recording this as a bed debt expense in the income statement of the business. Bad debt expense is debited to recognize the loss due to the uncollectible account Accounts receivable is credited to remove the uncollectible amount from the accounts receivable balance. The direct write off method is simpler than the allowance method as it takes care of uncollectible accounts with a single journal entry
It’s certainly easier for small business owners with no accounting background. Under this technique, a specific account receivable is removed from the accounting records at the time it is finally determined to be uncollectible. Sale of merchandise on account Sold merchandise on account to jim dobbs
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