When the direct write-off method is used, an entry for bad debt expense is required:

• A. whenever a sale is made on account
• B. at the end of each accounting period based on an estimate
• C. only when a specific account is determined to be uncollectible
• D. when the allowance for doubtful accounts is adjusted

Answer: (C)

Verified step by step guidance

1. Understand the direct write-off method: This method records bad debt expense only when a specific account is determined to be uncollectible, rather than estimating bad debts at the end of each accounting period.
2. Recognize the timing of the entry: Unlike the allowance method, the direct write-off method does not involve adjusting an allowance account periodically. Instead, bad debt expense is recorded directly when it becomes clear that a specific receivable cannot be collected.
3. Identify the journal entry: When a specific account is deemed uncollectible, the journal entry involves debiting 'Bad Debt Expense' and crediting 'Accounts Receivable' for the amount of the uncollectible account.
4. Consider the implications: The direct write-off method does not comply with the matching principle, as bad debt expense may be recorded in a different period than the related revenue. This can lead to less accurate financial reporting.
5. Apply the concept: To solve problems involving the direct write-off method, focus on identifying the specific account that is uncollectible and recording the appropriate journal entry at that time.