Entries for Bad Debt Expense under the Direct Write-Off and Allowance Method

Casebolt Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31:

Customer		Amount
Shawn Brooke		$16,900
Eve Denton		15,700
Art Malloy		21,500
Cassie Yost		4,100
	Total	58,200

a. Journalize the write-offs under the direct write-off method. If an amount box does not require an entry, leave it blank.

b. Journalize the write-offs under the allowance method. Also, journalize the adjusting entry for uncollectible accounts. The company recorded $4,000,000 of credit sales during the year. Based on past history and industry averages, 1-3/4% of credit sales are expected to be uncollectible. If an amount box does not require an entry, leave it blank.

Write-off
Adjustment

c. How much higher (lower) would Casebolt Companys net income have been under the direct write-off method than under the allowance method? by $