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

Instructions

Chart of Accounts

Journal

Final Question

Instructions

Seaforth International wrote off the following accounts receivable as uncollectible for the year ending December 31:

Customer

Amount

Kim Abel

$ 24,300

Lee Drake

31,195

Jenny Green

29,715

Mike Lamb

17,890

Total

$103,100

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

030 days

$ 735,000

1%

3160 days

290,000

2

6190 days

111,000

15

91120 days

70,000

30

More than 120 days

94,000

60

Total receivables

$1,300,000

A.	Journalize the write-offs under the direct write-off method. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles.
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 $89,000 and the company uses the analysis of receivables method. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles.
C.	How much higher (lower) would Seaforth Internationals net income have been under the allowance method than under the direct write-off method?

A. On December 31, journalize the write-offs under the direct write-off method. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 1

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3
4
5

B. On December 31, journalize the write-offs and the year-end adjusting entry under the allowance method, assuming that the allowance account had a beginning balance of $89,000 and the company uses the analysis of receivables method. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles.

PAGE 1

JOURNAL

ACCOUNTING EQUATION

	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
1
2
3
4
5
6
7