On August 31, 2018, Orchard Floral Supply had a $175.000 debit balance in Accounts Receivable and a $7,000 credit balance in Allowance for Bad Debts. During September, Orchard made: Sales on account, $520,000. Ignore Cost of Goods Sold. . Collections on account, $582,000. .Write-offs of uncollectible receivables, $5,000. Read the requirements. Date | Accounts and Explanation Debit Credit Sep. 30 Bad Debts Expense Allowance for Bad Debts Recorded bad debts expense for the period. A Requirements 1. Journalize all September entries using the allowance method. Bad debts expense was estimated at 3% of credit sales. Show all September activity in Accounts Receivable, Allowance for Bad Debts, and Bad Debts Expense (post to these T-accounts). 2. Using the same facts, assume that Orchard used the direct write-off method to account for uncollectible receivables. Journalize all September entries using the direct write-off method. Post to Accounts Receivable and Bad Debts Expense, and show their balances at September 30, 2018. 3. What amount of Bad Debts Expense would Orchard report on its September income statement under each of the two methods? Which am ach of the two methods? Which amount better matches expense with revenue? Give your reason. 4. What amount of net accounts receivable would Orchard report on its September 30, 2018, balance sheet under each of the two methods? Which amount is more realistic? Give your reason. Aug. 31, 2014 Bal. s Collections Aug 31, 2014 Cele Bal. Adj. Net Post all September entries in the appropriate T-accounts and calculate the ending balance in each account. (Post the transactions and calculate the account balance at September 30, 2018.) Sep. 30 Bad Debts Expense Accounts Receivable Wrote off uncollectible accounts. a 1 Bad Debt Expense Accounts Receivable Aug. 31 2014 Bal. 165,000 582,000 Collections Net credit sales 520,000 o write-offs siis' 4,500 Sep. 30 2018 Bal. 98,500 Sep. 30, 2018 Bal. 4,500 balance calculated in the l-accounts, for each method, as the balance that is reported on the income statement. Income Statement (Partial) Bad Debts Expense Allowance Method 10,400 Direct Write-Off Method $ 4,500 Allowance Method Direct Write-Off Method Balance Sheet (Partial): Accounts receivable Less: Allowance for Bad Debts A 's seen_ $ 9500