Casebolt Company wrote off the following accounts receivable as uncollectible for the first year of its operations

Question:

Casebolt Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31, 2014:

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 for 2014 under the direct write-off method.

b. Journalize the write-offs for 2014 under the allowance method. Also, journalize the adjusting entry for uncollectible accounts. The company recorded $5,250,000 of credit sales during 2014. Based on past history and industry averages, ¾% of credit sales are expected to be uncollectible.

c. How much higher (lower) would Casebolt Company’s 2014 net income have been under the direct write-off method than under the allowance method?

Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...