The following selected transactions were taken from the records of Rustic Tables Company for the year ending December 31:

June	8.	Wrote off account of Kathy Quantel, $8,440.
Aug.	14.	Received $3,000 as partial payment on the $12,500 account of Rosalie Oakes. Wrote off the remaining balance as uncollectible.
Oct.	16.	Received the $8,440 from Kathy Quantel, whose account had been written off on June 8. Reinstated the account and recorded the cash receipt.
Dec.	31.	Wrote off the following accounts as uncollectible (record as one journal entry):
		Wade Dolan	$4,600
		Greg Gagne	3,600
		Amber Kisko	7,150
		Shannon Poole	2,975
		Niki Spence	6,630
	31.	If necessary, record the year-end adjusting entry for uncollectible accounts.

Rustic Tables Company prepared the following aging schedule for its accounts receivable:

Aging Class (Number of Days Past Due)	Receivables Balance on December 31	Estimated Percent of Uncollectible Accounts
030 days	$320,000	1%
3160 days	110,000	3
6190 days	24,000	10
91120 days	18,000	33
More than 120 days	43,000	75
Total receivables	$515,000

Required:

A.

Journalize the transactions under the direct write-off method. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles.

B.

Journalize the transactions under the allowance method, assuming that the allowance account had a beginning credit balance of $36,000 on January 1 and the company uses the analysis of receivables method. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles.

C.

How much higher (lower) would Rustic Tables net income have been under the direct write-off method than under the allowance method?

CHART OF ACCOUNTS

Rustic Tables Company

General Ledger

	ASSETS
110	Cash
111	Petty Cash
121	Accounts Receivable-Wade Dolan
122	Accounts Receivable-Greg Gagne
123	Accounts Receivable-Amber Kisko
124	Accounts Receivable-Rosalie Oakes
125	Accounts Receivable-Shannon Poole
126	Accounts Receivable-Kathy Quantel
127	Accounts Receivable-Niki Spence
129	Allowance for Doubtful Accounts
131	Interest Receivable
132	Notes Receivable
141	Merchandise Inventory
145	Office Supplies
146	Store Supplies
151	Prepaid Insurance
181	Land
191	Store Equipment
192	Accumulated Depreciation-Store Equipment
193	Office Equipment
194	Accumulated Depreciation-Office Equipment

	LIABILITIES
210	Accounts Payable
211	Salaries Payable
213	Sales Tax Payable
214	Interest Payable
215	Notes Payable

	EQUITY
310	Owner, Capital
311	Owner, Drawing
312	Income Summary

	REVENUE
410	Sales
610	Interest Revenue

A. Journalize the transactions under the direct write-off method. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles.

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	DATE	DESCRIPTION	POST. REF.	DEBIT	CREDIT	ASSETS	LIABILITIES	EQUITY
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B. Journalize the transactions under the allowance method, assuming that the allowance account had a beginning credit balance of $36,000 on January 1 and the company uses the analysis of receivables method. If no entry is required, simply skip to the next transaction. Refer to the Chart of Accounts for exact wording of account titles.

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C. How much higher (lower) would Rustic Tables net income have been under the direct write-off method than under the allowance method?

by