Entries for Bad Debt Expense Under the Direct Write-Off and Allowance Methods Seaforth International wrote off the following accounts receivable as uncollectible for the year ending December 31: Customer Amount Kim Abel $21,550   Lee Drake 33,925   Jenny Green 27,565   Mike Lamb 19,460     Total $102,500     The company prepared the following aging schedule for its accounts receivable on December 31: Aging Class (Numberof Days Past Due) Receivables Balanceon December 31 Estimated Percent ofUncollectible Accounts 0-30 days   $715,000   1%   31-60 days   310,000   2      61-90 days   102,000   15      91-120 days   76,000   30      More than 120 days   97,000   60          Total receivables   $1,300,000         a.  Journalize the write-offs under the direct write-off method. If an amount box does not require an entry, leave it blank.                                         b.  Journalize the write-offs and the year-end adjusting entry under the allowance method, assuming that the allowance account had a beginning credit balance of $95,000 on January 1 and the company uses the analysis of receivables method. For a compound transaction, if an amount box does not require an entry, leave it blank. Write-off                                       Adjustment               c.  How much higher (lower) would Seaforth International's net income have been under the allowance method than under the direct write-off method?  $

Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter8: Receivables
Section: Chapter Questions
Problem 17E: Entries for bad debt expense under the direct write-off and allowance methods Casebolt Company wrote...
icon
Related questions
icon
Concept explainers
Question

Entries for Bad Debt Expense Under the Direct Write-Off and Allowance Methods

Seaforth International wrote off the following accounts receivable as uncollectible for the year ending December 31:

Customer Amount
Kim Abel $21,550  
Lee Drake 33,925  
Jenny Green 27,565  
Mike Lamb 19,460  
  Total $102,500  

 

The company prepared the following aging schedule for its accounts receivable on December 31:

Aging Class (Number
of Days Past Due)
Receivables Balance
on December 31
Estimated Percent of
Uncollectible Accounts
0-30 days   $715,000   1%  
31-60 days   310,000   2     
61-90 days   102,000   15     
91-120 days   76,000   30     
More than 120 days   97,000   60     
    Total receivables   $1,300,000      

 

a.  Journalize the write-offs under the direct write-off method. If an amount box does not require an entry, leave it blank.

       
       
       
       
       

b.  Journalize the write-offs and the year-end adjusting entry under the allowance method, assuming that the allowance account had a beginning credit balance of $95,000 on January 1 and the company uses the analysis of receivables method. For a compound transaction, if an amount box does not require an entry, leave it blank.

Write-off      
       
       
       
       
Adjustment      
       

c.  How much higher (lower) would Seaforth International's net income have been under the allowance method than under the direct write-off method?
  $

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 3 images

Blurred answer
Knowledge Booster
Receivables Management
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Financial And Managerial Accounting
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Century 21 Accounting General Journal
Century 21 Accounting General Journal
Accounting
ISBN:
9781337680059
Author:
Gilbertson
Publisher:
Cengage
Financial Accounting Intro Concepts Meth/Uses
Financial Accounting Intro Concepts Meth/Uses
Finance
ISBN:
9781285595047
Author:
Weil
Publisher:
Cengage
College Accounting, Chapters 1-27
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,