The Stevenson college has a 2,900 dollar balance to pay in the subsidiary ledger.

The allowance for doubtful accounts has a credit balance of 1750.81 in the general ledger.

There is a 0 dollar debit balance in the bad debt expense general ledger.

What accounts do I update and what are the new balances?

Is the bad debt expense account affected or is that only for direct write-off?

What is the major difference between direct write-off and allowance method?

Transcribed Image Text:

22 Received legal notification from Benson, Rosenbrook, and Martinson, P.C., attorneys at law, that Stevenson College had filed bankruptcy and will be unable to pay any of its outstanding debts to its suppliers. Write off the account as a bad debt. S Remember that Waren Sports Supply uses the Allowance method rather than Direct write-off for accounting for bad debts. 22 Received legal notification from Benson, Rosenbrook, and Martinson, P.C., attorneys at law, that Stevenson College had filed bankruptcy and will be unable to pay any of its outstanding debts to its suppliers. Write off the account as a bad debt. S Remember that Waren Sports Supply uses the Allowance method rather than Direct write-off for accounting for bad debts.

Answer rating: 100% (QA)

C The reason why this contra account is important is that it exerts no effect on the income statemen... View the full answer