# Entries for Bad Debt Expense Under the Direct Write-Off and Allowance MethodsSeaforth International wrote off the following accounts receivable as uncollectible for the year ending December 31:CustomerAmountKim Abel\$21,550 Lee Drake33,925 Jenny Green27,565 Mike Lamb19,460  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 31Estimated Percent ofUncollectible Accounts0-30 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?  \$

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 (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.

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

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Step 1

a.

Journal entry for the write-offs under the direct write-off method:

Step 2

b.

Journal entry for the write-offs under allowance method:

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