On June 30, 2023, Alberta Wireless had a $100,000 debit balance in Accounts Receivable. During July, the company had sales revenue of $150,000, which included $140,000 in credit sales. Other data for July include:

a. Collections of accounts receivable, $120,000.

b. Write-offs of uncollectible receivables, $4,000.

Required
1. Record bad debt expense for July by the direct write-off method. Use T-accounts to show all July activity in Accounts Receivable and Bad Debt Expense.

2. Record bad debt expense and write-offs of customer accounts for July by the allowance method. Use T-accounts to show all July activity in Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense. The June 30 unadjusted balance in Allowance for Doubtful Accounts was $3,000 (credit). Bad debt expense was estimated at 2 percent of credit sales.

3. What amount of bad debt expense would Alberta Wireless report on its July income statement under the two methods? Which amount better matches expense with revenue? Give your reason.

4. What amount of net accounts receivable would Alberta Wireless report on its July 31 balance sheet under the two methods? Which amount is more realistic? Give your reason.