1. Casebolt Company wrote off the following A claim against the customer created by selling merchandise or services on credit.accounts receivable as uncollectible for the first year of its operations ending December 31:

   Customer		Amount
   Shawn Brooke		$8,000
   Eve Denton		7,500
   Art Malloy		10,200
   Cassie Yost		1,900
   	Total	$27,600

   a. Journalize the write-offs under the direct write-off method. If an amount box does not require an entry, leave it blank.

   	Accounts Payable Accounts Receivable Allowance for Doubtful Accounts Bad Debt Expense Cash Sales
   	Accounts Payable-Shawn Brooke Accounts Receivable-Shawn Brooke Allowance for Doubtful Accounts Bad Debt Expense Cash Sales
   	Accounts Payable-Eve Denton Accounts Receivable-Eve Denton Allowance for Doubtful Accounts Bad Debt Expense Cash Sales
   	Accounts Payable-Art Malloy Accounts Receivable-Art Malloy Allowance for Doubtful Accounts Bad Debt Expense Cash Sales
   	Accounts Payable-Cassie Yost Accounts Receivable-Cassie Yost Allowance for Doubtful Accounts Bad Debt Expense Cash Sales

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   b. Journalize the write-offs under the allowance method. Also, journalize the adjusting entry for uncollectible accounts. The company recorded $1,890,000 of credit sales during the year. Based on past history and industry averages, 1 3/4% of credit sales are expected to be uncollectible. For a compound transaction, if an amount box does not require an entry, leave it blank.

   Write-off	Accounts Payable Accounts Receivable Allowance for Doubtful Accounts Bad Debt Expense Cash Sales
   	Accounts Payable-Shawn Brooke Accounts Receivable-Shawn Brooke Allowance for Doubtful Accounts Bad Debt Expense Cash Sales
   	Accounts Payable-Eve Denton Accounts Receivable-Eve Denton Allowance for Doubtful Accounts Bad Debt Expense Cash Sales
   	Accounts Payable-Art Malloy Accounts Receivable-Art Malloy Allowance for Doubtful Accounts Bad Debt Expense Cash Sales
   	Accounts Payable-Cassie Yost Accounts Receivable-Cassie Yost Allowance for Doubtful Accounts Bad Debt Expense Cash Sales
   Adjustment	Accounts Payable Accounts Receivable Allowance for Doubtful Accounts Bad Debt Expense Cash Sales
   	Accounts Payable Accounts Receivable Allowance for Doubtful Accounts Bad Debt Expense Cash Sales

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   c. How much higher (lower) would Casebolt Company's net income have been under the direct write-off method than under the allowance method?

   • Higher
   • Lower
   by $