Entries for bad debt expense under the direct write-off and allowance method

The following selected transactions were taken from the records of Rustic Tables Company for the year ending December 31:

Date	Transaction
June 8.	Wrote off account of Kathy Quantel, $9,500.
Aug. 14.	Received $6,750 as partial payment on the $17,010 account of Rosalie Oakes. Wrote off the remaining balance as uncollectible.
Oct. 16.	Received the $9,500 from Kathy Quantel, whose account had been written off on June 8. Reinstated the account and recorded the cash receipt.
Dec. 31.	Wrote off the following accounts as uncollectible (record as one journal entry): Wade Dolan $2,760 Greg Gagne 1,710 Amber Kisko 6,550 Shannon Poole 3,800 Niki Spence 1,050
Dec. 31.	If necessary, journalize the year-end adjusting entry for uncollectible accounts.

If no entry is required, select "No Entry Required" and leave the amount boxes blank. If an amount box does not require an entry, leave it blank.

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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.

Date	Account	Debit	Credit
June 8	Accounts Payable-Kathy QuantelAccounts Receivable-Kathy QuantelAllowance for Doubtful AccountsBad Debt ExpenseNo Entry Required
	Accounts Payable-Kathy QuantelAccounts Receivable-Kathy QuantelAllowance for Doubtful AccountsBad Debt ExpenseNo Entry Required
Aug. 14	Accounts Payable-Rosalie OakesAccounts Receivable-Rosalie OakesAllowance for Doubtful AccountsCashNo Entry Required
	Accounts Payable-Rosalie OakesAccounts Receivable-Rosalie OakesAllowance for Doubtful AccountsBad Debt ExpenseNo Entry Required
	Accounts Payable-Rosalie OakesAccounts Receivable-Rosalie OakesBad Debt ExpenseCashNo Entry Required
Oct. 16	Accounts Payable-Kathy QuantelAccounts Receivable-Kathy QuantelAllowance for Doubtful AccountsBad Debt ExpenseNo Entry Required
	Accounts Payable-Kathy QuantelAdvertising ExpenseAllowance for Doubtful AccountsBad Debt ExpenseNo Entry Required
Oct. 16	Accounts Payable-Kathy QuantelAdvertising ExpenseAllowance for Doubtful AccountsCashNo Entry Required
	Advertising ExpenseAccounts Receivable-Kathy QuantelAllowance for Doubtful AccountsCashNo Entry Required
Dec. 31	Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsBad Debt ExpenseNo Entry Required
	Accounts Payable-Wade DolanAccounts Receivable-Wade DolanAllowance for Doubtful AccountsBad Debt ExpenseNo Entry Required
	Accounts Payable-Greg GagneAccounts Receivable-Greg GagneAllowance for Doubtful AccountsBad Debt ExpenseNo Entry Required
	Accounts Payable-Amber KiskoAccounts Receivable-Amber KiskoAllowance for Doubtful AccountsCashNo Entry Required
	Accounts Payable-Shannon PooleAccounts Receivable-Shannon PooleAllowance for Doubtful AccountsBad Debt ExpenseNo Entry Required
	Accounts Payable-Niki SpenceAccounts Receivable-Niki SpenceAllowance for Doubtful AccountsInterest RevenueNo Entry Required
Dec. 31	Allowance for Doubtful AccountsBad Debt ExpenseCashNo Entry RequiredSales
	Allowance for Doubtful AccountsBad Debt ExpenseCashNo Entry RequiredSales

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b. Journalize the transactions under the allowance method, assuming that the allowance account had a balance of $28,500 at the beginning of the year and the company uses the analysis of receivables method. Rustic Tables 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	$456,000	1%
31-60 days	171,000	8%
61-90 days	54,000	25%
91-120 days	20,000	45%
More than 120 days	28,000	85%
Total receivables	$729,000

Date	Account	Debit	Credit
June 8	Accounts Payable-Kathy QuantelAccounts Receivable-Kathy QuantelAllowance for Doubtful AccountsCashNo Entry Required
	Accounts Payable-Kathy QuantelAccounts Receivable-Kathy QuantelAllowance for Doubtful AccountsBad Debt ExpenseNo Entry Required
Aug. 14	Accounts Payable-Rosalie OakesAccounts Receivable-Rosalie OakesBad Debt ExpenseCashNo Entry Required
	Accounts Payable-Rosalie OakesAccounts Receivable-Rosalie OakesAllowance for Doubtful AccountsBad Debt ExpenseNo Entry Required
	Accounts Payable-Rosalie OakesAccounts Receivable-Rosalie OakesAllowance for Doubtful AccountsCashNo Entry Required
Oct. 16	Accounts Receivable-Kathy QuantelAdvertising ExpenseBad Debt ExpenseNo Entry RequiredSales
	Accounts Payable-Kathy QuantelAdvertising ExpenseAllowance for Doubtful AccountsBad Debt ExpenseNo Entry Required
Oct. 16	Accounts Payable-Kathy QuantelAdvertising ExpenseBad Debt ExpenseCashNo Entry Required
	Advertising ExpenseAccounts Receivable-Kathy QuantelBad Debt ExpenseCashNo Entry Required
Dec. 31	Accounts ReceivableAllowance for Doubtful AccountsCashNo Entry RequiredNotes Receivable
	Accounts Payable-Wade DolanAccounts Receivable-Wade DolanAdvertising ExpenseInterest RevenueNo Entry Required
	Accounts Payable-Greg GagneAccounts Receivable-Greg GagneAdvertising ExpenseNo Entry RequiredSales
	Accounts Payable-Amber KiskoAccounts Receivable-Amber KiskoAdvertising ExpenseCashNo Entry Required
	Accounts Payable-Shannon PooleAccounts Receivable-Shannon PooleAdvertising ExpenseDividendsNo Entry Required
	Accounts Payable-Niki SpenceAccounts Receivable-Niki SpenceAdvertising ExpenseCashNo Entry Required
Dec. 31	Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsBad Debt ExpenseNo Entry Required
	Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsBad Debt ExpenseNo Entry Required

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c. How much higher (lower) would Rustic Tables net income have been under the direct write-off method than under the allowance method?

HigherLower

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