Direct Write-Off Method Journalize the following transactions, using the direct write-off method of accounting for uncollectible receivables: Oct. 2: Received $1,980 from Matthew Chapman and wrote off the remainder owed of $1,560 as uncollectible. If an amount box does not require an entry, leave it blank. Oct. 2 Dec. 20: Reinstated the account of Matthew Chapman and received $1,560 cash in full payment. If an amount box does not require an entry, leave it blank. Dec. 20-Reinstate Dec. 20-Collection Entries for Bad Debt Expense under the Direct Write-Off and Allowance Methods The following selected transactions were taken from the records of Shipway Company for the first year of its operations ending December 31: Apr. 13. Wrote off account of Dean Sheppard, $8,430. May 15. Received $4,220 as partial payment on the $11,210 account of Dan Pyle. Wrote off the remaining balance as uncollectible. July 27. Received $8,430 from Dean Sheppard, whose account had been written off on April 13. Reinstated the account and recorded the cash receipt. Dec. 31. Wrote off the following accounts as uncollectible (record as one journal entry): Paul Chapman $5,650 Duane DeRosa 4,220 Teresa Galloway 2,530 Ernie Klatt Marty Richey 3,540 1,260 Dec. 31 If necessary, record the year-end adjusting entry for uncollectible accounts. If no entry is required, select "No Entry" and leave the amount boxes blank. If an amount box does not require an entry, leave it blank. a. Journalize the transactions under the direct write-off method. Apr. 13 Bad Debt Expense Accounts Receivable-Dean Sheppard 8,430 11,210 May 15 Cash 4,220 Bad Debt Expense 6,990 Accounts Receivable-Dan Pyle July 27-reinstate Accounts Receivable-Dean Sheppard Bad Debt Expense. July 27-collection Cash 8,430 8,430 July 27-collection Cash 8,430 Accounts Receivable-Dean Sheppard 8,430 V Dec. 31-write-off Bad Debt Expense 17,200 Accounts Receivable-Paul Chapman Accounts Receivable-Duane DeRosa Accounts Receivable-Teresa Galloway Accounts Receivable-Ernie Klatt 5,650 4,220 2,530 3,540 Accounts Receivable-Marty Richey 1,260 Dec. 31-adjusting Feedback Check My Work Remember that under the direct write-off method, Bad Debt Expense is not recorded until the customer's account is determined to be worthless. Under the allowance method once a customer's account is identified as uncollectible, it is written off against the allowance account. 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, 2% of credit sales are expected to be uncollectible. Shipway Company recorded $2,056,200 of credit sales during the year. Apr. 13 Allowance for Doubtful Accounts Accounts Receivable-Dean Sheppard May 15 Cash Allowance for Doubtful Accounts Accounts Receivable-Dan Pyle July 27-reinstate Accounts Receivable-Dean Sheppard July 27-reinstate Accounts Receivable-Dean Sheppard Allowance for Doubtful Accounts July 27-collection Cash Accounts Receivable-Dean Sheppard Dec. 31-write-off Allowance for Doubtful Accounts Accounts Receivable-Paul Chapman Accounts Receivable-Duane DeRosa Accounts Receivable-Teresa Galloway Accounts Receivable-Ernie Klatt Accounts Receivable-Marty Richey Dec. 31-adjusting Bad Debt Expense Allowance for Doubtful Accounts Feedback Check My Work Partially correct by $ 00 000000 00 c. How much higher (lower) would Shipway Company's net income have been under the direct write-off method than under the allowance method? Feedback Check My Work Compare the bad debt expense account balance for both methods