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:

June 8.	Wrote off account of Kathy Quantel, $6,660.
Aug. 14.	Received $4,730 as partial payment on the $11,920 account of Rosalie Oakes. Wrote off the remaining balance as uncollectible.
Oct. 16.	Received the $6,660 from Kathy Quantel, which 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	$1,930
Greg Gagne	1,200
Amber Kisko	4,600
Shannon Poole	2,660
Niki Spence	730

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	$320,000				2	%
								31-60 days	120,000				7
								61-90 days	38,000				20
								91-120 days	14,000				55
								More than 120 days	19,000				75
								Total receivables	$511,000

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 under the direct write-off method.

June 8	Accounts Payable-Kathy QuantelAccounts Receivable-Kathy QuantelAllowance for Doubtful AccountsBad Debt ExpenseNotes ReceivableNo entry	- Select -
	Accounts Payable-Kathy QuantelAccounts Receivable-Kathy QuantelAllowance for Doubtful AccountsBad Debt ExpenseCashNo entry		- Select -
Aug. 14	Accounts Payable-Rosalie OakesAccounts Receivable-Rosalie OakesAllowance for Doubtful AccountsCashNotes ReceivableNo entry	- Select -	- Select -
	Accounts Payable-Rosalie OakesAccounts Receivable-Rosalie OakesAllowance for Doubtful AccountsBad Debt ExpenseInterest RevenueNo entry	- Select -	- Select -
	Accounts Payable-Rosalie OakesAccounts Receivable-Rosalie OakesAllowance for Doubtful AccountsBad Debt ExpenseCashNo entry	- Select -	- Select -
Oct. 16-reinstate	Accounts Payable-Kathy QuantelAccounts Receivable-Kathy QuantelAllowance for Doubtful AccountsBad Debt ExpenseInterest RevenueNo entry	- Select -
	Accounts ReceivableAllowance for Doubtful AccountsBad Debt ExpenseCashSalesNo entry		- Select -
Oct. 16-collection	Accounts ReceivableAllowance for Doubtful AccountsBad Debt ExpenseCashSalesNo entry	- Select -
	Accounts Payable-Kathy QuantelAccounts Receivable-Kathy QuantelAllowance for Doubtful AccountsCashSalesNo entry		- Select -
Dec. 31-write-off	Accounts Payable-Kathy QuantelAccounts Receivable-Kathy QuantelAllowance for Doubtful AccountsBad Debt ExpenseCashNo entry	- Select -	- Select -
	Accounts Payable-Wade DolanAccounts Receivable-Wade DolanAllowance for Doubtful AccountsBad Debt ExpenseCashNo entry	- Select -	- Select -
	Accounts Payable-Greg GagneAccounts Receivable-Greg GagneAllowance for Doubtful AccountsBad Debt ExpenseInterest RevenueNo entry	- Select -	- Select -
	Accounts Payable-Amber KiskoAccounts Receivable-Amber KiskoAllowance for Doubtful AccountsCashInterest RevenueNo entry	- Select -	- Select -
	Accounts Payable-Shannon PooleAccounts Receivable-Shannon PooleAllowance for Doubtful AccountsBad Debt ExpenseCashNo entry	- Select -	- Select -
	Accounts Payable-Niki SpenceAccounts Receivable-Niki SpenceAllowance for Doubtful AccountsCashInterest RevenueNo entry	- Select -	- Select -
Dec. 31-adjusting	Accounts ReceivableAllowance for Doubtful AccountsBad Debt ExpenseCashIncome SummaryNo entry	- Select -
	Accounts ReceivableAllowance for Doubtful AccountsBad Debt ExpenseCashIncome SummaryNo entry		- Select -

b. Journalize the transactions under the allowance method, assuming that the allowance account had a beginning balance of $19,980 at the beginning of the year and the company uses the analysis of receivables method.

June 8	Accounts Payable-Kathy QuantelAccounts Receivable-Kathy QuantelAllowance for Doubtful AccountsCashNotes ReceivableNo entry	- Select -
	Accounts Payable-Kathy QuantelAccounts Receivable-Kathy QuantelAllowance for Doubtful AccountsBad Debt ExpenseCashNo entry		- Select -
Aug. 14	Accounts Payable-Rosalie OakesAccounts Receivable-Rosalie OakesBad Debt ExpenseCashSalesNo entry	- Select -	- Select -
	Accounts Payable-Rosalie OakesAccounts Receivable-Rosalie OakesAllowance for Doubtful AccountsBad Debt ExpenseNotes ReceivableNo entry	- Select -	- Select -
	Accounts Payable-Rosalie OakesAccounts Receivable-Rosalie OakesAllowance for Doubtful AccountsBad Debt ExpenseCashNo entry	- Select -	- Select -
Oct. 16-reinstate	Accounts Payable-Kathy QuantelAccounts Receivable-Kathy QuantelAllowance for Doubtful AccountsBad Debt ExpenseInterest RevenueNo entry	- Select -
	Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsBad Debt ExpenseSalesNo entry		- Select -
Oct. 16-collection	Accounts ReceivableAllowance for Doubtful AccountsBad Debt ExpenseCashSalesNo entry	- Select -
	Accounts Payable-Kathy QuantelAccounts Receivable-Kathy QuantelBad Debt ExpenseCashSalesNo entry		- Select -
Dec. 31-write-off	Accounts ReceivableAllowance for Doubtful AccountsBad Debt ExpenseCashNotes ReceivableNo entry	- Select -	- Select -
	Accounts Payable-Wade DolanAccounts Receivable-Wade DolanAllowance for Doubtful AccountsBad Debt ExpenseInterest RevenueNo entry	- Select -	- Select -
	Accounts Payable-Greg GagneAccounts Receivable-Greg GagneAllowance for Doubtful AccountsBad Debt ExpenseSalesNo entry	- Select -	- Select -
	Accounts Payable-Amber KiskoAccounts Receivable-Amber KiskoAllowance for Doubtful AccountsBad Debt ExpenseCashNo entry	- Select -	- Select -
	Accounts Payable-Shannon PooleAccounts Receivable-Shannon PooleAllowance for Doubtful AccountsBad Debt ExpenseInterest RevenueNo entry	- Select -	- Select -
	Accounts Payable-Niki SpenceAccounts Receivable-Niki SpenceAllowance for Doubtful AccountsCashBad Debt ExpenseNo entry	- Select -	- Select -
Dec. 31-adjusting	Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsBad Debt ExpenseIncome SummaryNo entry	- Select -
	Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsBad Debt ExpenseIncome SummaryNo entry		- Select -

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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