Entries for Bad Debt Expense Under the Direct Write-Off and Allowance Method

The following selected transactions were taken from the records of Silhouette Company for the year ending December 31, 2014:

Mar. 4	Wrote off account of Myron Rimando, $9,580.
May 19	Received $6,800 as partial payment on the $17,150 account of Shirley Mason. Wrote off the remaining balance as uncollectible.
Aug. 7	Received the $9,580 from Myron Rimando, which had been written off on March 4. Reinstated the account and recorded the cash receipt.
Dec. 31	Wrote off the following accounts as uncollectible (record as one journal entry):

Brandon Peele	$2,780
Clyde Stringer	1,720
Ned Berry	6,610
Mary Adams	3,830
Gina Bowers	1,050

Dec. 31 If necessary, record the year-end adjusting entry for the uncollectible accounts. The company prepared the following aging schedule for its accounts receivable:

Aging Class (Number of Days Past Due)									Receivables Balance on December 31				Estimated Percent of Uncollectible Accounts
								0-30 days	$460,000				1	%
								31-60 days	172,000				7
								61-90 days	55,000				25
								91-120 days	20,000				45
								More than 120 days	28,000				90
								Total receivables	$735,000

For those amount boxes in which no entry is required, leave the box blank. If an account is not required, select "No entry" from the dropdown box(es)

a. Journalize the transactions for 2014 under the direct write-off method.

b. Journalize the transactions for 2014 under the allowance method, assuming that the allowance account had a beginning balance of $28,740 on January 1, 2014, and the company uses the analysis of receivables method.

c. How much higher (lower) would Silhouette's 2014 net income have been under the direct write-off method than under the allowance method?