Entries for bad debt expense under the direct write-off and allowance OBJ. 5 methods Seaforth International wrote off the following accounts receivable as uncollectible for the year ending December 31, 2016:

Customer Amount Kim Abel $ 21,550 Lee Drake 33,925 Jenny Green 27,565 Mike Lamb 19,460 Total $102,500 The company prepared the following aging schedule for its accounts receivable on December 31, 2016:

Aging Class (Number of Days Past Due)

Receivables Balance on December 31 Estimated Percent of Uncollectible Accounts 0–30 days $ 715,000 1%

31–60 days 310,000 2 61–90 days 102,000 15 91–120 days 76,000 30 More than 120 days 97,000 60 Total receivables $1,300,000

a. Journalize the write-offs for 2016 under the direct write-off method.

b. Journalize the write-offs and the year-end adjusting entry for 2016 under the allowance method, assuming that the allowance account had a beginning balance of $95,000 on January 1, 2016, and the company uses the analysis of receivables method.

c. How much higher (lower) would Seaforth International’s 2016 net income have been under the allowance method than under the direct write-off method?