The following selected transactions were taken from the records of Silhouette Company for the year ending December 31, 2012:
Mar. 4. Wrote off account of Myron Rimando $7,500.
May 19. Received $2,000 as partial payment on the $10,000 account of Shirley Mason. Wrote off the remaining balance as uncollectible.
Aug. 7. Received the $7,500 from Myron Rimando, which had been written off on March 4. Reinstated the account and recorded the cash receipt.
Dec. 31. Wrote off the following accounts as uncollectible (record as one journal entry):
Brandon Peele ... $ 5,000
Clyde Stringer ... 9,000
Ned Berry .... 13,000
Mary Adams ..... 2,000
Gina Bowers ..... 4,500
Dec. 31. If necessary, record the year-end adjusting entry for uncollectible accounts.
a. Journalize the transactions for 2012 under the direct write-off method.
b. Journalize the transactions for 2012 under the allowance method, assuming that the allowance account had a beginning balance of $45,000 on January 1, 2012, and the company uses the analysis of receivables method. Silhouette Company prepared the following aging schedule for its accounts receivable:

c. How much higher (lower) would Silhouette’s 2012 net income have been under the direct write-off method than under the allowancemethod?

  • CreatedMay 07, 2012
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