E8-17 (Supplement 8A) Recording Write-Offs and Reporting Accounts Receivable Using the Direct Write-Off Method [LO 8-S1] Trevorson Electronics is a small company privately owned by Jon Trevorson, an electrician who installs wiring in new homes. Because the companys financial statements are prepared only for tax purposes, Jon uses the direct write-off method. During 2015, its first year of operations, Trevorson Electronics sold $30,200 of services on account. The company collected $26,100 of these receivables during the year, and Jon believed that the remaining $4,100 was fully collectible. In 2016, Jon discovered that none of the $4,100 would be collected, so he wrote off the entire amount. To make matters worse, Jon sold only $5,150 of services during the year.

1. Prepare journal entries to record the transactions in 2015 and 2016. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)

1. Record the service revenue of $30,200 sold on account in 2015.

2. Record the collection of $26,100 from outstanding customer accounts in 2015.

3.Record the write-off of outstanding customer balances of $4,100 determined to be uncollectible in 2016.

4. Record the service revenue of $5,150 sold on account in 2016.

2. 2-a. Using only the information provided (ignore other operating expenses), prepare comparative income statements for 2015 and 2016. 2-b. Was 2015 really as profitable as indicated by its income statement? Yes No 2-c. Was 2016 quite as bad as indicated by its income statement? Yes No

2-c. Was 2016 quite as bad as indicated by its income statement? Yes No