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		$24,400
Lee Drake		34,000
Jenny Green		29,800
Mike Lamb		17,800
	Total	$106,000

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		$735,000		1	%
31-60 days		300,000		2
61-90 days		115,000		15
91-120 days		75,000		30
More than 120 days		95,000		60
Total receivables		$1,320,000

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

		fill in the blank f29c2df4dfcd027_2	fill in the blank f29c2df4dfcd027_3
		fill in the blank f29c2df4dfcd027_5	fill in the blank f29c2df4dfcd027_6
		fill in the blank f29c2df4dfcd027_8	fill in the blank f29c2df4dfcd027_9
		fill in the blank f29c2df4dfcd027_11	fill in the blank f29c2df4dfcd027_12
		fill in the blank f29c2df4dfcd027_14	fill in the blank f29c2df4dfcd027_15

b. Journalize the write-offs and the year-end adjusting entry under the allowance method, assuming that the allowance account had a beginning balance of $92,000 and the company uses the analysis of receivables method. If an amount box does not require an entry, leave it blank.

		fill in the blank 6655c8fbb050fc3_2	fill in the blank 6655c8fbb050fc3_3
		fill in the blank 6655c8fbb050fc3_5	fill in the blank 6655c8fbb050fc3_6
		fill in the blank 6655c8fbb050fc3_8	fill in the blank 6655c8fbb050fc3_9
		fill in the blank 6655c8fbb050fc3_11	fill in the blank 6655c8fbb050fc3_12
		fill in the blank 6655c8fbb050fc3_14	fill in the blank 6655c8fbb050fc3_15
		fill in the blank 6655c8fbb050fc3_17	fill in the blank 6655c8fbb050fc3_18
		fill in the blank 6655c8fbb050fc3_20	fill in the blank 6655c8fbb050fc3_21

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