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 | $19,600 | ||
Eve Denton | 18,300 | ||
Art Malloy | 25,100 | ||
Cassie Yost | 4,700 | ||
Total | 67,700 |
a. Journalize the write-offs under the direct write-off method. If an amount box does not require an entry, leave it blank.
Bad Debt Expense | |||
Accounts Receivable-Shawn Brooke | |||
Accounts Receivable-Eve Denton | |||
Accounts Receivable-Art Malloy | |||
Accounts Receivable-Cassie Yost |
b. Journalize the write-offs under the allowance method. Also, journalize the adjusting entry for uncollectible accounts. The company recorded $5,400,000 of credit sales during the year. Based on past history and industry averages, 1-1/2% of credit sales are expected to be uncollectible. If an amount box does not require an entry, leave it blank.
Write-off | Allowance for Doubtful Accounts | ||
Accounts Receivable-Shawn Brooke | |||
Accounts Receivable-Eve Denton | |||
Accounts Receivable-Art Malloy | |||
Accounts Receivable-Cassie Yost | |||
Adjustment | Bad Debt Expense | ||
Allowance for Doubtful Accounts |
c. How much higher (lower) would Casebolt Companys net income have been under the direct write-off method than under the allowance method? Higher by $
Feedback
Compare the bad debt expense account balance for both methods.
Learning Objective 5.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started