Direct Write-Off and Allowance Methods Casebolt Company wrote off $30,000 of accounts receivable as uncollectible for the first year of its operations ending December 31. If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases, cash outflows, and the income statement effects that decrease net income as negative amounts. However, for contra asset accounts, enter account increases as a negative value. (b) Assume that Casebolt Company uses the allowance method. Illustrate the effects of the $30,000 of write-offs of accounts receivable on the accounts and financial statements. Financial Statement Effects No effect Accounts receivable Assets Balance Sheet Liabilities Allowance for doubtful accounts. No effect Statement of Cash Flows Stockholders' Equity No effect Income Statement No effect (c) Assume that Casebolt Company uses the allowance method based on a percent of sales estimate. The company had $5,250,000 of credit sales during the year. Based on industry averages, %% of credit sales are expected to to uncollectible. Illustrate the effects of the adjustment for uncollectible accounts on the accounts and financial statements. Financial Statement Effects No effect Balance Sheet Assets Liabilities Stockholders' Equity Accounts receivable. Allowance for doubtful accounts No effect Retained earnings -39,375 Statement of Cash Flows Income Statement Bad debt expense -39,375