Entries for Bad Debt Expense Under the Direct Write-Off and Allowance Methods Casebolt Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31: Customer Amount Shawn Brooke $4,650 Eve Denton 5,180 Art Malloy 11,050 Cassie Yost 9,120 Total $30,000 a. Journalize the write-offs under the direct write-off method. If an amount box does not require an entry, leave it blank. Bad Debt Expense Accounts Receivable-Shawn Brooke Accounts Receivable-Eve Denton Accounts Receivable-Art Malloy Accounts Receivable-Cassie Yost b. Journalize the write-offs under the allowance method. Also, journalize the adjusting entry for uncollectible accounts. The company recorded $5,250,000 of credit sales during the year. Based on past history and industry averages, ¾% of credit sales are expected to be uncollectible. If an amount box does not require an entry, leave it blank. Write-off Allowance for Doubtful Accounts Accounts Receivable-Shawn Brooke Accounts Receivable-Eve Denton Accounts Receivable-Art Malloy Accounts Receivable-Cassie Yost Adjustment Bad Debt Expense Allowance for Doubtful Accounts c. How much higher (lower) would Casebolt Company's net income have been under the direct write-off method than under the allowance method? Higher by $
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Entries for
Casebolt Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31:
| Customer | Amount | ||
| Shawn Brooke | $4,650 | ||
| Eve Denton | 5,180 | ||
| Art Malloy | 11,050 | ||
| Cassie Yost | 9,120 | ||
| Total | $30,000 |
a. Journalize the write-offs under the direct write-off method. If an amount box does not require an entry, leave it blank.
| Bad Debt Expense | |||
| Accounts Receivable-Shawn Brooke | |||
| Accounts Receivable-Eve Denton | |||
| Accounts Receivable-Art Malloy | |||
| Accounts Receivable-Cassie Yost |
b. Journalize the write-offs under the allowance method. Also, journalize the
| Write-off | Allowance for Doubtful Accounts | ||
| Accounts Receivable-Shawn Brooke | |||
| Accounts Receivable-Eve Denton | |||
| Accounts Receivable-Art Malloy | |||
| Accounts Receivable-Cassie Yost | |||
| Adjustment | Bad Debt Expense | ||
| Allowance for Doubtful Accounts |
c. How much higher (lower) would Casebolt Company's net income have been under the direct write-off method than under the allowance method?
Higher by $
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