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, $8,590. May 15. Received $4,300 as partial payment on the $11,420 account of Dan Pyle. Wrote off the remaining balance as uncollectible. July 27. Received $8,590 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 following accounts as uncollectible (record as one journal entry) Paul Chapman $5,760 Duane DeRosa 4,300 Teresa Galloway 2,580 Ernie Klatt 3,610 Marty Richey 1,290 31. If necessary, record the year end adjusting entry for the 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. Journalize the transactions under the direct write-off method. Apr. 13 May 15 111 II ll 110 May 15 July 27 July 27 III II II IIIIII II DII II II IIIIII II Dec. 31 > > > > > > Dec. 31 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, 2% of credit sales are expected to be uncollectible, Shipway Company recorded $2,096,100 of credit sales during the year Apr 13 Based on past history and industry averages, 2% of credit sales are expected to be uncollectible. Shipway Company recorded $2,096,100 of credit sales during the year Apr. 13 May 15 July 27 July 27 > II III II II 111111 II II III II II IIIlll II Dec. 31 > Dec. 31 C. How much higher (lower) would Shipway Company's net income have been under the direct write-off method than under the allowance method? by