for (a); numerical examples are required

Q1. When a company has a policy of making sales for which credit is extended, it is reasonable to expect a portion of those sales to be uncollectible. As a result of this, a company must recognize bad debt expense. There are basically two methods of recognizing bad debt expense: (1) direct write-off method, and (2) allowance method. Instructions (a) Describe carefully both the direct write-off method and the allowance method of recognizing bad debt expense, give a numerical example with the journal entry for each method. (1.5 marks) (b) ) Discuss the reasons why one of the above methods is preferable to the other and the reasons why the other method is not usually in accordance with IFRS. (0.5 mark)