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	$24,000
Lee Drake	34,800
Jenny Green	29,900
Mike Lamb	17,500
Total	$106,200

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	$730,000	1%
31-60 days	290,000	2
61-90 days	110,000	15
91-120 days	80,000	30
More than 120 days	95,000	60
Total receivables	$1,305,000

Question Content Area

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

blank	Account	Debit	Credit
blank	Accounts Payable-Kim AbelAccounts Receivable-Kim AbelAllowance for Doubtful AccountsBad Debt ExpenseCash	- Select -	- Select -
	Accounts Payable-Kim AbelAccounts Receivable-Kim AbelAllowance for Doubtful AccountsBad Debt ExpenseCash	- Select -	- Select -
	Accounts Payable-Lee DrakeAccounts Receivable-Lee DrakeAllowance for Doubtful AccountsBad Debt ExpenseCash	- Select -	- Select -
	Accounts Payable-Jenny GreenAccounts Receivable-Jenny GreenAllowance for Doubtful AccountsBad Debt ExpenseCashSales	- Select -	- Select -
	Accounts Payable-Mike LambAccounts Receivable-Mike LambAllowance for Doubtful AccountsBad Debt ExpenseCash	- Select -	- Select -

Question Content Area

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 $92,200 and the company uses the analysis of receivables method. If an amount box does not require an entry, leave it blank.

blank	Account	Debit	Credit
blank	Accounts Payable-Kim AbelAccounts Receivable-Kim AbelAllowance for Doubtful AccountsBad Debt ExpenseCash	- Select -	- Select -
	Accounts Payable-Kim AbelAccounts Receivable-Kim AbelAllowance for Doubtful AccountsBad Debt ExpenseCash	- Select -	- Select -
	Accounts Payable-Lee DrakeAccounts Receivable-Lee DrakeAllowance for Doubtful AccountsBad Debt ExpenseCash	- Select -	- Select -
	Accounts Payable-Jenny GreenAccounts Receivable-Jenny GreenAllowance for Doubtful AccountsBad Debt ExpenseCash	- Select -	- Select -
	Accounts Payable-Mike LambAccounts Receivable-Mike LambAllowance for Doubtful AccountsBad Debt ExpenseCash	- Select -	- Select -
blank	Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsBad Debt ExpenseCash	- Select -	- Select -
	Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsBad Debt ExpenseCash	- Select -	- Select -

Question Content Area

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

HigherLower

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