At December 31, 2012, the trial balance of Flexenfusser Company contained the following amounts before adjustment. Debits

Question:

At December 31, 2012, the trial balance of Flexenfusser Company contained the following amounts before adjustment.
Debits Credits
Accounts Receivable $250,000
Allowance for Doubtful Accounts $ 1,100
Sales Revenue 600,000
Instructions
(a) Prepare the adjusting entry at December 31, 2012, to record bad debts expense under each of the following independent assumptions.
(1) An indicates that $12,500 of will be uncollectible.
(2) The company estimates that 2% of sales will be uncollectible.
(b) Repeat part (a) assuming that instead of a credit balance, there is a $1,100 debit balance in Allowance for Doubtful Accounts.
(c) During the next month, January 2013, a $3,200 account receivable is written off as uncollectible. Prepare the journal entry to record the write-off.
(d) Repeat part (c) assuming that Flexenfusser Company uses the direct write-off method instead of the allowance method in accounting for uncollectible What are the advantages of using the allowance method in accounting for uncollectible accounts as compared to the direct write-off method?

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