8-5A

At December 31, 2017, the trial balance of Darby Company contained the following amounts before adjustment.

Debit	Credit
Accounts Receivable	$398,000
Allowance for Doubtful Accounts	$1,400
Sales Revenue	918,200

(a)

Based on the information given, which method of accounting for bad debts is Darby Company usingthe direct write-off method or the allowance method?

Direct write-off methodAllowance method

(b)	Prepare the adjusting entry at December 31, 2017, for bad debt expense under each of the following independent assumptions.
(1) An aging schedule indicates that $11,800of accounts receivable will be uncollectible.
(2) The company estimates that1% of sales will be uncollectible.
(c)	Repeat part (b) assuming that instead of a credit balance there is an $1,400debit balance in Allowance for Doubtful Accounts.
(d)	During the next month, January 2018, a $3,100account receivable is written off as uncollectible. Prepare the journal entry to record the write-off.
(e)	Repeat part (d) assuming that Darby uses the direct write-off method instead of the allowance method in accounting for uncollectible accounts receivable.

(Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No	Account Titles	Debit	Credit
(b)	(1) Dec. 31
(2) Dec. 31
(c)	(1) Dec. 31
(2) Dec. 31
(d)
(e)