Question

P9-5B At December 31, 2014, the trial balance of Markowitz Company contained the
following amounts before adjustment.


Instructions
(a) Prepare the adjusting entry at December 31, 2014, to record bad debt expense under
each of the following independent assumptions.
(1) An aging schedule indicates that $13,500 of accounts receivable will be uncollectible.
(2) The company estimates that 2% of sales will be uncollectible.
(b) Repeat part (a) assuming that instead of a credit balance, there is a $1,100 debit balance
in Allowance for Doubtful Accounts.
(c) During the next month, January 2015, a $3,200 account receivable is written off as
uncollectible. Prepare the journal entry to record the write-off.
(d) Repeat part (c) assuming that Markowitz Company uses the direct write-off method
instead of the allowance method in accounting for uncollectible accounts receivable.
(e) What are the advantages of using the allowance method in accounting for
uncollectible accounts as compared to the direct write-offmethod?


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  • CreatedJanuary 30, 2014
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