The following selected transactions were taken from the records of Shipway Company for the first year...

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The following selected transactions were taken from the records of Shipway Company for the first year of its operations ending December 31: 13 Wrote off account of Dean Sheppard, $8,290. Apr. May 15 Received $420 as partial payment on the $7,220 account of Dan Pyle. Wrote off the remaining balance as uncollectible. July 27 27 account and recorded the cash receipt. Received $8,290 from Dean Sheppard, whose account had been written off on April 13. Reinstated the Dec. 31 Wrote off the following accounts as uncollectible (record as one journal entry): Paul Chapman $2,280 Duane DeRosa Teresa Galloway 3,535 4,625 Ernie Klatt 1,095 Marty Richey 1,800 31 If necessary, journalize the year-end adjusting entry for uncollectible accounts. Required: a formali the transactions under the direct write-off method. 31 If necessary, journalize the year-end adjusting entry for uncollectible accounts. Required: a. Journalize the transactions under the direct write-off method. b. Journalize the transactions under the allowance method. Shipway Company uses the percent of credit sales method of estimating uncollectible accounts expense. Based on past history and industry averages, 0.75% of credit sales are expected to be uncollectible. Shipway Company recorded $3,720,000 of credit sales during the year. c. How much higher (lower) would Shipway Company's net income have been under the direct write-off method than under the allowance method? CHART OF ACCOUNTS Shipway Company General Ledger ASSETS 110 Cash 111 Petty Cash 121 Accounts Receivable-Paul Chapman 122 Accounts Receivable-Duane DeRosa 123 Accounts Receivable-Teresa Galloway 124 Accounts Receivable-Ernie Klatt. 125 Accounts Receivable-Dan Pyle 126 Accounts Receivable-Marty Richey 127 Accounts Receivable-Dean Sheppard 129 Allowance for Doubtful Accounts REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Merchandise Sold 520 Sales Salaries Expense 521 Advertising Expense 522 Depreciation Expense-Store Equipment 523 Delivery Expense 524 Repairs Expense 129 Allowance for Doubtful Accounts 524 Repairs Expense 131 Interest Receivable 132 Notes Receivable 141 Merchandise Inventory 145 Office Supplies 146 Store Supplies 151 Prepaid Insurance 181 Land 191 Store Equipment 192 Accumulated Depreciation-Store Equipment 193 Office Equipment 194 Accumulated Depreciation-Office Equipment 529 Selling Expenses 530 Office Salaries Expense 531 Rent Expense 532 Depreciation Expense-Office Equipment 533 Insurance Expense 534 Office Supplies Expense 535 Store Supplies Expense 536 Credit Card Expense 537 Cash Short and Over 538 Bad Debt Expense 539 Miscellaneous Expense 710 Interest Expense LIABILITIES 210 Accounts Payable 193 Office Equipment 194 Accumulated Depreciation-Office Equipment LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends 539 Miscellaneous Expense 710 Interest Expense General Journal General Journal Instructions a Journalze the transactions under the direct write-off method. 2 3 PAGE ACCOUNTING EQUATION JOURNAL DATE DESCRIPTION POST REF DEBIT CREDIT ASSETS LIABILITIES EQUI c. How much higher (lower) would Shipway Company's net income have been under the direct write-off method than under the allowance method? The following selected transactions were taken from the records of Shipway Company for the first year of its operations ending December 31: 13 Wrote off account of Dean Sheppard, $8,290. Apr. May 15 Received $420 as partial payment on the $7,220 account of Dan Pyle. Wrote off the remaining balance as uncollectible. July 27 27 account and recorded the cash receipt. Received $8,290 from Dean Sheppard, whose account had been written off on April 13. Reinstated the Dec. 31 Wrote off the following accounts as uncollectible (record as one journal entry): Paul Chapman $2,280 Duane DeRosa Teresa Galloway 3,535 4,625 Ernie Klatt 1,095 Marty Richey 1,800 31 If necessary, journalize the year-end adjusting entry for uncollectible accounts. Required: a formali the transactions under the direct write-off method. 31 If necessary, journalize the year-end adjusting entry for uncollectible accounts. Required: a. Journalize the transactions under the direct write-off method. b. Journalize the transactions under the allowance method. Shipway Company uses the percent of credit sales method of estimating uncollectible accounts expense. Based on past history and industry averages, 0.75% of credit sales are expected to be uncollectible. Shipway Company recorded $3,720,000 of credit sales during the year. c. How much higher (lower) would Shipway Company's net income have been under the direct write-off method than under the allowance method? CHART OF ACCOUNTS Shipway Company General Ledger ASSETS 110 Cash 111 Petty Cash 121 Accounts Receivable-Paul Chapman 122 Accounts Receivable-Duane DeRosa 123 Accounts Receivable-Teresa Galloway 124 Accounts Receivable-Ernie Klatt. 125 Accounts Receivable-Dan Pyle 126 Accounts Receivable-Marty Richey 127 Accounts Receivable-Dean Sheppard 129 Allowance for Doubtful Accounts REVENUE 410 Sales 610 Interest Revenue EXPENSES 510 Cost of Merchandise Sold 520 Sales Salaries Expense 521 Advertising Expense 522 Depreciation Expense-Store Equipment 523 Delivery Expense 524 Repairs Expense 129 Allowance for Doubtful Accounts 524 Repairs Expense 131 Interest Receivable 132 Notes Receivable 141 Merchandise Inventory 145 Office Supplies 146 Store Supplies 151 Prepaid Insurance 181 Land 191 Store Equipment 192 Accumulated Depreciation-Store Equipment 193 Office Equipment 194 Accumulated Depreciation-Office Equipment 529 Selling Expenses 530 Office Salaries Expense 531 Rent Expense 532 Depreciation Expense-Office Equipment 533 Insurance Expense 534 Office Supplies Expense 535 Store Supplies Expense 536 Credit Card Expense 537 Cash Short and Over 538 Bad Debt Expense 539 Miscellaneous Expense 710 Interest Expense LIABILITIES 210 Accounts Payable 193 Office Equipment 194 Accumulated Depreciation-Office Equipment LIABILITIES 210 Accounts Payable 211 Salaries Payable 213 Sales Tax Payable 214 Interest Payable 215 Notes Payable EQUITY 310 Common Stock 311 Retained Earnings 312 Dividends 539 Miscellaneous Expense 710 Interest Expense General Journal General Journal Instructions a Journalze the transactions under the direct write-off method. 2 3 PAGE ACCOUNTING EQUATION JOURNAL DATE DESCRIPTION POST REF DEBIT CREDIT ASSETS LIABILITIES EQUI c. How much higher (lower) would Shipway Company's net income have been under the direct write-off method than under the allowance method?