Entries for Bad Debt Expense Under the Direct Write-Off and Allowance Methods

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

Customer		Amount
Shawn Brooke		$4,650
Eve Denton		5,180
Art Malloy		11,050
Cassie Yost		9,120
	Total	$30,000

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

	Accounts Receivable-Art MalloyAccounts Receivable-Cassie YostAccounts Receivable-Eve DentonAccounts Receivable-Shawn BrookeBad Debt Expense	- Select -	- Select -
	Accounts Payable-Shawn BrookeAccounts Receivable-Shawn BrookeAllowance for Doubtful AccountsBad Debt ExpenseSales	- Select -	- Select -
	Accounts Payable-Eve DentonAccounts Receivable-Eve DentonAllowance for Doubtful AccountsBad Debt ExpenseSales	- Select -	- Select -
	Accounts Payable-Art MalloyAccounts Receivable-Art MalloyAllowance for Doubtful AccountsBad Debt ExpenseSales	- Select -	- Select -
	Accounts Payable-Cassie YostAccounts Receivable-Cassie YostAllowance for Doubtful AccountsBad Debt ExpenseSales	- Select -	- Select -

b. Journalize the write-offs under the allowance method. Also, journalize the adjusting entry for uncollectible accounts. The company recorded $5,250,000 of credit sales during the year. Based on past history and industry averages, % of credit sales are expected to be uncollectible. If an amount box does not require an entry, leave it blank.

Write-off	Accounts Receivable-Art MalloyAccounts Receivable-Cassie YostAccounts Receivable-Eve DentonAccounts Receivable-Shawn BrookeAllowance for Doubtful Accounts	- Select -	- Select -
	Accounts Payable-Shawn BrookeAccounts Receivable-Shawn BrookeAllowance for Doubtful AccountsBad Debt ExpenseSales	- Select -	- Select -
	Accounts Payable-Eve DentonAccounts Receivable-Eve DentonAllowance for Doubtful AccountsBad Debt ExpenseSales	- Select -	- Select -
	Accounts Payable-Art MalloyAccounts Receivable-Art MalloyAllowance for Doubtful AccountsBad Debt ExpenseSales	- Select -	- Select -
	Accounts Payable-Cassie YostAccounts Receivable-Cassie YostAllowance for Doubtful AccountsBad Debt ExpenseSales	- Select -	- Select -
Adjustment	Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsBad Debt ExpenseSales	- Select -	- Select -
	Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsBad Debt ExpenseSales	- Select -	- Select -

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

HigherLower

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