At December 31, 2014, the trial balance of Mariette Company contained the following amounts before adjustment.

Instructions
(a) Prepare the adjusting entry at December 31, 2014, to record bad debt expense under each of the following independent assumptions.
(1) An aging schedule indicates that $13,800 of accounts receivable 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 $1,400 debit balance in Allowance for Doubtful Accounts.
(c) During the next month, January 2015, 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 Mariette Company uses the direct write-off method instead of the allowance method in accounting for uncollectible accounts receivable.
(e) What are the advantages of using the allowance method in accounting for uncollectible accounts as compared to the direct write-offmethod?

Transcribed Image Text:

Debits Credits Accounts Receivable Allowance for Doubtful Accounts Sales Revenue $250,000 $1,400 600,000