On

August

31,

2024,

Orchard

Floral Supply had a

$165,000

debit balance in Accounts Receivable and a

$6,600

credit balance in Allowance for Bad Debts. During

September,

Orchard

made:

Sales on account,

$580,000.

Ignore Cost of Goods Sold.

Collections on account,

$613,000.

Write-offs of uncollectible receivables,

$6,000.

Requirement 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).

Begin by journalizing all

September

entries using the allowance method. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)

Sales on account,

$580,000.

Ignore Cost of Goods Sold.

Date			Accounts and Explanation	Debit	Credit
Sep. 30

Collections on account,

$613,000.

Date			Accounts and Explanation	Debit	Credit
Sep. 30

Write-offs of uncollectible receivables,

$6,000.

Date			Accounts and Explanation	Debit	Credit
Sep. 30

Journalize the Bad Debts Expense for

September

using the allowance method. Bad Debts Expense was estimated at

3%

of credit sales.

Date			Accounts and Explanation	Debit	Credit
Sep. 30

Post all

September

entries in the appropriate T-accounts and calculate the ending balance in each account. (Enter the beginning balance if applicable. Then post the transactions and calculate the account balance at

September

30,

2024.)

Accounts Receivable					Allowance for Bad Debts
Bad Debt Expense

Requirement 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,

2024.

Begin by journalizing all

September

entries using the direct write-off method. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)

Sales on account,

$580,000.

Ignore Cost of Goods Sold.

Date			Accounts and Explanation	Debit	Credit
Sep. 30

Collections on account,

$613,000.

Date			Accounts and Explanation	Debit	Credit
Sep. 30

Write-offs of uncollectible receivables,

$6,000.

Date			Accounts and Explanation	Debit	Credit
Sep. 30

Post to Accounts Receivable and Bad Debts Expense and show their balances at

September

30,

2024.

(Enter the beginning balance if applicable. Then post the transactions and calculate the account balance at

September

30,

2024.)

Accounts Receivable					Bad Debt Expense

Requirement 3. What amount of Bad Debts Expense would

Orchard

report on its

September

income statement under each of the two methods? Which amount better matches expense with revenue? Give your reason.

Enter the amount of bad debt expense

Orchard

would report on its

September

30,

2024

income statement under each of the two methods.

Income Statement (Partial)	Allowance Method	Direct Write-Off Method
Bad Debts Expense

Bad Debts Expense under the

better matches expense with revenue because the expense is recorded

in the same period sales are made

when the exact amount of bad debt is known

when the receivable is collected

.

Requirement 4. What amount of net accounts receivable would

Orchard

report on its

September

30,

2024,

balance sheet under each of the two methods? Which amount is more realistic? Give your reason.

Enter the amount of net accounts receivable

Orchard

would report on its

September

balance sheet under each of the two methods. (Complete all answer boxes. For accounts with a $0 balance, make sure to enter "0" in the appropriate column.)

Balance Sheet (Partial):	Allowance Method		Direct Write-Off Method
Accounts receivable
Less: Allowance for Bad Debts

Net accounts receivable under the

allowance method

direct write-off method

is more realistic because it shows the amount of the receivables that the company