1. Entries for Bad Debt Expense Under the Direct Write-Off and Allowance Methods

   Seaforth International wrote off the following accounts receivable as uncollectible for the year ending December 31:

   Customer		Amount
   Kim Abel		$21,550
   Lee Drake		33,925
   Jenny Green		27,565
   Mike Lamb		19,460
   	Total	$102,500

   The company prepared the following aging schedule for its accounts receivable on December 31:

   Aging Class (Number of Days Past Due)	Receivables Balance on December 31			Estimated Percent of Uncollectible Accounts
   0-30 days		$715,000		1%
   31-60 days		310,000		2
   61-90 days		102,000		15
   91-120 days		76,000		30
   More than 120 days		97,000		60
   Total receivables		$1,300,000

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

   b. Journalize the write-offs and the year-end adjusting entry under the allowance method, assuming that the allowance account had a beginning credit balance of $95,000 on January 1 and the company uses the analysis of receivables method. For a compound transaction, if an amount box does not require an entry, leave it blank.

   Write-off
   Adjustment

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

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