b. Journalize the write-offs and the year-end adjusting entry under the allowanc
ID: 2592636 • Letter: B
Question
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?
Lower or higher
Please help with these I really don't understand how to do these.
E C EC Chegg Study | Gt Cengage can't reach this page CengageNowv2 × Can't reach this page | Q ACG 2020 chapter 8 | + v LT X v2 cengagenow.com/ilm Assignmentain do?invoker-assignments takeAssignmen Session cator-assignment-takem Ch 9-3 Exercises & Problems Print item eBook 1. EX.09-05.BLANKSHEET Entries for Bad Debt Expense Under the Dlrect Write-Off and Allowance Methods Seaforth International wrote off the following accounts receivable as uncollectible for the year ending December 31 2. EX.09-06.ALGO Customer Kim Abel Lee Drake Jenny Green Mike Lamb Amount $21,550 33,925 27,565 19,460 $102,500 3. EX.09-11.ALGO 4. EX.09-15.ALGO 5. EX.09-18 6. EX.09-20.BLANKSHEET AL... Total 7. EX.09-22.BLANKSHEET AL... The company prepared the following aging schedule for its accounts receivable on December 31: Aging Class (Number of Days Past Due) 0-30 days 31-60 days 61-90 days 91-120 days More than 120 days Receivables Balance Estimated Percent of on December 31 Uncollectible Accounts $715,000 310,000 102,000 76,000 97,000 $1,300,000 1% 15 30 60 Total receivables Check My Work 2 more Check My Work uses remaining Previous Next Progress: 5/7 items Assignment Score: 25% All work saved. Save and Exit Submit Assignment for Grading 1:01 PM Type here to search 12/10/2017 20Explanation / Answer
c. Lower by $14650
Under the direct write-off method, the bad debt expense for the year would have been $102500 while under the allowance method, it would have been $117150. Thus, under allowance method, the bad debt expense would have been higher by $14650 ($117150 - $102500) hence net income would have been lower by $14650.
Workings:
No. Account Titles and Explanation Debit Credit a. Bad debt expense 102500 Accounts receivable 102500 (To record write-offs under direct write-off method) b. Write-off: Allowance for Uncollectible accounts 102500 Accounts receivable 102500 (To record write-offs under allowance method) Adjustment: Bad debt expense 117150 Allowance for Uncollectible accounts 117150 (To record bad debt expense for the year)Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.