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?

  • CreatedFebruary 28, 2014
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