C. How much higher (lower) would Shipway Companys net income have been under the direct write-off method than under the allowance method?

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Instructions The following selected transactions were taken from the records of Shipway Company for the first year of its operations ending December 31 Wrote off account of Dean Sheppard, $8,460. Apr. 13 May Received $550 as partial payment on the $7,040 account of Dan Pyle. Wrote off the remaining balance 15 as uncollectible. July Received $8,460 from Dean Sheppard, whose account had been written off on April 13. Reinstated the 27 account and recorded the cash receipt. Dec 31 Wrote off the following accounts as uncollectible (record as one journal entry): Paul Chapman $2,055 Duane DeRosa 3,580 Teresa Galloway 4,760 Ernie Klatt 1,480 Marty Richey 1,690 necessary, record the year-end adjusting entry for uncollectible accounts. 31 Required: A. Journalize the transactions under the direct write-off method. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles. B. Journalize the transactions under the allowance method. Shipway Company uses the percent of credit sales method of estimating uncollectible accounts expense. Based on past history and industry averages, 0.90% of credit sales are expected to be uncollectible. Shipway Company recorded $3,788,000 of credit sales during the year. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles. C. How much higher (lower) would Shipway Company's net income have been under the direct write-off method than under the allowance method? CHART OF ACCOUNTS Shipway Company General Ledger ASSETS REVENUE 110 Cash 410 Sales 111 Petty Cash 610 Interest Revenue 121 Accounts Receivable-Paul Chapman EXPENSES 122 Accounts Receivable-Duane DeRosa 510 Cost of Merchandise Sold 123 Accounts Receivable-Teresa Galloway 520 Sales Salaries Expense 124 Accounts Receivable-Ernie Klatt 521 Advertising Expense 125 Accounts Receivable-Dan Pyle 522 Depreciation Expense-Store Equipment 126 Accounts Receivable-Marty Richey 523 Delivery Expense 127 Accounts Receivable-Dean Sheppard 524 Repairs Expense 129 Allowance for Doubtful Accounts 529 Selling Expenses 131 Interest Receivable 530 Office Salaries Expense 132 Notes Receivable 531 Rent Expense 141 Merchandise Inventory 532 Depreciation Expense-Office Equipment 145 Office Supplies 533 Insurance Expense 146 Store Supplies 534 Office Supplies Expense 151 Prepaid Insurance 535 Store Supplies Expense 181 Land 536 Credit Card Expense 191 Store Equipment 537 Cash Short and Over 192 Accumulated Depreciation-Store Equipment 538 Bad Debt Expense 193 Office Equipment 539 Miscellaneous Expense 194 Accumulated Depreciation-Office Equipment 710 Interest Expense LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends 313 Income Summary