Question
Entries for Bad Debt Expense under the Direct Write-Off and Allowance Method Casebolt Company wrote off the following accounts receivable as uncollectible for the first
Entries for Bad Debt Expense under the Direct Write-Off and Allowance Method
Casebolt Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31:
Customer | Amount | ||
Shawn Brooke | $11,700 | ||
Eve Denton | 10,900 | ||
Art Malloy | 15,100 | ||
Cassie Yost | 2,800 | ||
Total | 40,500 |
a. Journalize the write-offs for under the direct write-off method. If an amount box does not require an entry, leave it blank.
b. Journalize the write-offs for under the allowance method. Also, journalize the adjusting entry for uncollectible accounts. The company recorded $3,920,000 of credit sales during the year. Based on past history and industry averages, 1 1/4% 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 | |||
Adjustment | |||
c. How much higher (lower) would Casebolt Company's net income have been under the direct write-off method than under the allowance method? by $
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