At December 31, 2014, the trial balance of Valcik Company contained the follow- ing amounts before adjustment.

Instructions

(a) Prepare the adjusting entry at December 31, 2014, to record bad debt expense, assuming that the aging schedule indicates that $7,600 of accounts receivable will be uncollectible.

(b) Repeat part (a) assuming that instead of a credit balance there is a $2,500 debit balance in Allowance for Doubtful Accounts.

(c) During the next month, January 2015, a $750 account receivable is written off as uncollectible. Prepare the journal entry to record the write-off.

(d) Repeat part (c), assuming that Valcik 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 an aging schedule and the allowance method in accounting for uncollectible accounts as compared to the direct write-off method?

Transcribed Image Text:

Debit Credit Accounts Receivable Allowance for Doubtful Accounts Sales Revenue $120,000 $ 2,800 680,000