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Seaforth International wrote off the following accounts receivable as uncollectible for the year ending December 31: Customer Amount $ 21,550 Kim Abel 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) Estimated Percent of Uncollectible Accounts Receivables Balance on December 31 $ 715,000 0-30 days 31-60 days 61-90 days 91-120 days More than 120 days 1% 310,000 102,000 15 76,000 30 97,000 60 Total receivables $1,300,000 a. Journalize the write-offs under the direct write-off method. 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. c. How much higher (lower) would Seaforth International's net income have been under the allowance method than under the direct write-off method?

Seaforth International wrote off the following accounts receivable as uncollectible for the year ending December 31: Customer Amount $ 21,550 Kim Abel 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) Estimated Percent of Uncollectible Accounts Receivables Balance on December 31 $ 715,000 0-30 days 31-60 days 61-90 days 91-120 days More than 120 days 1% 310,000 102,000 15 76,000 30 97,000 60 Total receivables $1,300,000 a. Journalize the write-offs under the direct write-off method. 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. c. How much higher (lower) would Seaforth International's net income have been under the allowance method than under the direct write-off method?

Principles of Accounting Volume 1
Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter7: Accounting Information Systems
Section: Chapter Questions
Problem 5EB: Catherines Cookies has a beginning balance in the Accounts Receivable control total account of...
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Seaforth International wrote off the following accounts receivable as uncollectible for the year ending December 31: Customer Amount $ 21,550 Kim Abel Lee Drake 33,925 Jenny Green 27,565 Mike Lamb 19,460 Total $102,500
Transcribed Image Text:Seaforth International wrote off the following accounts receivable as uncollectible for the year ending December 31: Customer Amount $ 21,550 Kim Abel 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) Estimated Percent of Uncollectible Accounts Receivables Balance on December 31 $ 715,000 0-30 days 31-60 days 61-90 days 91-120 days More than 120 days 1% 310,000 102,000 15 76,000 30 97,000 60 Total receivables $1,300,000 a. Journalize the write-offs under the direct write-off method. 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. c. How much higher (lower) would Seaforth International's net income have been under the allowance method than under the direct write-off method?
Transcribed Image Text:The company prepared the following aging schedule for its accounts receivable on December 31: Aging Class (Number of Days Past Due) Estimated Percent of Uncollectible Accounts Receivables Balance on December 31 $ 715,000 0-30 days 31-60 days 61-90 days 91-120 days More than 120 days 1% 310,000 102,000 15 76,000 30 97,000 60 Total receivables $1,300,000 a. Journalize the write-offs under the direct write-off method. 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. 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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