September 5 Sie months ialer. Merch 5, 2013. Bast Fernor manoe receivedAnthony\'

Question

September 5 Sie months ialer. Merch 5, 2013. Bast Fernor manoe receivedAnthony's deck for 515.000·M, note apologizing tor 'he late Faymen1 Read the ren ulrement 1. Journate the transaction; nr Heat Patnmmanca Ca using tha dret w n_ht mathnd I nora Cnst nt iaads Sold Juna 1. Hest partornahCA Call Hores sold 21 uut1at marchandsa to Anthony nicklng Conpany arateaunt lgnana Cost nt Goods Sold ll Phanes acord d bits frst then radits Sak ct tha AX lanation on ist ina at 1ha cuma antr tab Accounts and Explanution Debit Credit Resquiements un Juumalize the traneacfons for Bes Peromance Cel Phones using th uaing the direct write-ot methoop Prin Done

Explanation / Answer

1.

2. The main limitation of the direct write-off method is that it may be contrary to the matching principle. The revenue may be recorded in one accounting period while the actual write-off of the debt may happen much later in another accounting period due to which the matching of the revenue and expense may be violated. Due to this, the direct write-off method is not permitted under the GAAP except where the amount of write-off is immaterial.

Date Accounts and Explanation Debit Credit 2018 Jun. 1 Accounts receivable 21000 Sales revenue 21000 (To record sale on account) Jul. 15 Cash 5000 Accounts receivable 5000 (To record collection on account) Sep. 5 Bad debt expense 16000 Accounts receivable 16000 (To record write-off of uncollectible account) 2019 Mar. 5 Accounts receivable 16000 Bad debt expense 16000 (To reinstate account previously written-off) Mar. 5 Cash 16000 Accounts receivable 16000 (To record receipt against previous write-off)

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