Becker wrote off the following accounts receivable as uncollectible for the first year of its operations ending
Question:
Customer Amount
Skip Simon .... $20,000
Clarence Watson . 13,500
Bill Jacks ...... 7,300
Matt Putnam .... 4,200
Total ....... $45,000
a. Journalize the write-offs for 2008 under the direct write-off method.
b. Journalize the write-offs for 2008 under the allowance method. Also, journalize the estimate of bad debts. The company recorded $2,000,000 of credit sales during 2008.
Based on past history and industry averages, 3% of credit sales are expected to be uncollectible.
c. How much higher (lower) would Becker’s 2008 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...
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Related Book For
Financial Accounting An Integrated Statements Approach
ISBN: 978-0324312119
2nd Edition
Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren
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