P8-27A, part 1 and 2

Accounting for uncollectible accounts using the allowance (percent-of-sales) and direct write-off methods and reporting receivables on the balance sheet On August 31, 2016, Lily Floral Supply had a $145,000 debit balance in Accounts Receivable and a $5, 800 credit balance in Allowance for Bad Debts. During September, Lily made Sales on account, $540,000. Ignore Cost of Goods Sold. Collections on account, $581,000. Write-offs of uncollectible receivables, $5,000. Journalize all September entries using the allowance method. Bad debts expense was estimated at 1% of credit sales. Show all September activity in Accounts Receivable, Allowance for Bad Debts, and Bad Debts Expense (post to these T-accounts). Using the same facts, assume that Lily 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, 2016