A trader sold goods to Zahid on credit. Zahid was unable to pay the amount owing and the balance on his account was written off. Which entries will the trader make to write off this irrecoverable debt? | Option | account to be debited | account to be credited |
Explanation
To write off an irrecoverable debt, the business should debit the account of the customer (Zahid) and credit the account of irrecoverable debts. This is because the business has lost the right to receive payment from Zahid, so it should remove the amount from its accounts.
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