Entries for Bad Debt Expense under the Direct Write-Off and Allowance Methods The following selected transactions were taken from the records of Shipway Company for the first year of its operations ending December 31 : Apr. 13. Wrote off account of Dean Sheppard, $3,080. May 15. Received $1,540 as partial payment on the $4,100 account of Dan Pyle. Wrote off the remaining balance as uncollectible. July 27. Received $3,080 from Dean Sheppard, whose account had been written off on April 13. Reinstated the account and recorded the cash receipt. Dec, 31. Wrote off the followino accounts as uncollectible (record as one journal entry): Dec. 31 if necessary, record the year-end adjusting entry for uncollectible accounts. 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. Joumalize the transactions under the direct write-off method. Accounts Receivable-Dean sheppard May 15 July 27 -reinstate July 27-collection Cash Accounts Receivable-Dean Sheppard Dec. 31-write-off Aad Debt Expense v Accounts Receivable-Paul Chapman Accounts Recelvable-Duane DeRosa Accounts Receivable-Teresa Galloway Accounts Receivable-Ernie Klatt. Accounts Receivable-Marty Richey Dec. 31-adjusting No Entry No Entry =V P check Mr Work Remember that under the direct write-olf method, Bad Debt Expense is not recorded until the customer's account is determined to be worthiess Under the allowance method once a customer's account is identified as uncollectible, it is writien off against the aliowance account. b. Journalize the transactions under the allowance method. Shipway Company uses the percent of credit sales method of estimating uncollectible accounts expense. Based on past history and industry averages, 3% of credit sales are expected to be uncollectible. Shipway Cornpany recorded $500,400 of credit sales during the year. Aocounts Receivable-Dean Sheppard May 15 July 27-reinstate Accounts Receivable-Dean Sheppard Allowance for DoubtulAccouints ? July 27-collection Cash v Accounts Receivable-Dean Sheppard. Dec. 31-write-off Allowance for Doubtful Accounts Accounts Receivable-Paul Chapman . Accounts Receivable-Duane DeRosa v Accounts Recelvable-Teresa Galloway . V Accounts Receivable-Ernie Klatt Accounts Receivable-Marty Richey : V Dec. 31-adjusting Bad Debt Expense v Allowance for Doubtful Accounts