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Fisher Manufacturing uses the allowance method of writing off doubtful accounts. On March 1st, Fisher wrote off what it believed to be an uncollectible receivable from Mega Corporation for $3,145. Later, on July 1st, Fisher received the $3,145 from Mega.

Which of the following entries should Fisher make?

A. Accounts Receivable—Mega Corporation: Debit of $3,145; Allowance for Doubtful Accounts: Credit of $3,145

B. Cash: Debit of $3,145; Bad Debt Expense: Credit of $3,145

C. Accounts Receivable—Mega Corporation: Debit of $3,145; Bad Debt Expense: Credit of $3,145

D. Allowance for Doubtful Accounts: Debit of $3,145; Bad Debt Expense: Credit of $3,145

Answer :

Fisher Manufacturing writes off questionable accounts using the allowance approach. $3,145 was debited and $3,145 was credited.

What kind of allowance would that be?

A workspace compensation is money paid to a work to cover expenses or make up for only certain working conditions. For fact, many workers receive a budgetary allowance to cover their travel or leisure expenses.

How might allowances work?

A holding account is an exemption that lowers the amount of tax that must be withheld solely from an employee's paycheck. Higher restrictions result in decreased income tax breaks, but fewer deferral exemptions lead to larger deductions.

Briefing:

Accounts Receivable—Mega Corporation

= Debit of $3,145;

Allowance for Doubtful Accounts

= Credit of $3,145

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