Weekly Questions: Receivables

Q1: Described the ‘allowance’ method for recording bad debts expense and how it differs to the ‘direct write-off’ method.

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Q2: Show the journal entries for recognising bad debts expense using the ‘allowance’ method and the ‘direct write-off’ method. Include the effect on GST and narrations.

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Q3: What are bad debts expense recognised in a firm’s accounts under the ‘allowance’ method and the ‘direct write-off’ method? Some people say the ‘allowance’ method is ‘better’ in terms of its timing of when to recognise a firm’s bad debts expense? Why, or why not, do you think this might be the case?

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