Entries for bad debt expense under the direct write-off and allowance methods

Seaforth International wrote off the following accounts receivable as uncollectible for the year ending December 31:

Customer	Amount
Kim Abel	$24,100
Lee Drake	33,150
Jenny Green	29,900
Mike Lamb	17,500
Total	$104,650

The company prepared the following aging schedule for its accounts receivable on December 31:

Aging Class (Number of Days Past Due)	Receivables Balance on December 31	Estimated Percent of Uncollectible Accounts
0-30 days	$730,000	1%
31-60 days	300,000	2
61-90 days	115,000	15
91-120 days	75,000	30
More than 120 days	93,000	60
Total receivables	$1,313,000

Question Content Area

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

blank	Account	Debit	Credit
blank	Accounts Payable-Kim AbelAccounts Receivable-Kim AbelAllowance for Doubtful AccountsBad Debt ExpenseCash
	Accounts Payable-Kim AbelAccounts Receivable-Kim AbelAllowance for Doubtful AccountsBad Debt ExpenseCash
	Accounts Payable-Lee DrakeAccounts Receivable-Lee DrakeAllowance for Doubtful AccountsBad Debt ExpenseCash
	Accounts Payable-Jenny GreenAccounts Receivable-Jenny GreenAllowance for Doubtful AccountsBad Debt ExpenseCashSales
	Accounts Payable-Mike LambAccounts Receivable-Mike LambAllowance for Doubtful AccountsBad Debt ExpenseCash

Question Content Area

b. Journalize the write-offs and the year-end adjusting entry under the allowance method, assuming that the allowance account had a beginning balance of $90,650 and the company uses the analysis of receivables method. If an amount box does not require an entry, leave it blank.

blank	Account	Debit	Credit
blank	Accounts Payable-Kim AbelAccounts Receivable-Kim AbelAllowance for Doubtful AccountsBad Debt ExpenseCash
	Accounts Payable-Kim AbelAccounts Receivable-Kim AbelAllowance for Doubtful AccountsBad Debt ExpenseCash
	Accounts Payable-Lee DrakeAccounts Receivable-Lee DrakeAllowance for Doubtful AccountsBad Debt ExpenseCash
	Accounts Payable-Jenny GreenAccounts Receivable-Jenny GreenAllowance for Doubtful AccountsBad Debt ExpenseCash
	Accounts Payable-Mike LambAccounts Receivable-Mike LambAllowance for Doubtful AccountsBad Debt ExpenseCash
blank	Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsBad Debt ExpenseCash
	Accounts PayableAccounts ReceivableAllowance for Doubtful AccountsBad Debt ExpenseCash

Question Content Area

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

HigherLower

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