Quantum Technologies, a computer consulting firm, has decided to write off the $15,925 balance of an account owed by a customer. Illustrate the effects on the accounts and financial statements of recording the write-off based on the following assumptions:

If no account or activity is affected, select "No effect" from the dropdown list and leave the corresponding number entry box blank. Enter account decreases and cash outflows as negative amounts.

(a) Assuming that the direct write-off method is used:

		Balance Sheet
		Assets			=	Liabilities	+	Stockholders' Equity
		Accounts receivableAllowance for doubtful accountsNo effect	+	CashMerchandise inventoryNo effect	=	Accounts payableAccounts receivableNo effect	+	Capital stockRetained earningsNo effect
		fill in the blank 5		fill in the blank 6		fill in the blank 7		fill in the blank 8
	Statement of Cash Flows					Income Statement
	FinancingInvestingOperatingNo effect	fill in the blank 10				Bad debt expenseCost of merchandise soldSalesNo effect		fill in the blank 12

(b) Assuming that the allowance method is used:

		Balance Sheet
		Assets			=	Liabilities	+	Stockholders' Equity
		Accounts payableAccounts receivableNo effect	-	Allowance for doubtful accountsCashNo effect	=	Accounts payableAllowance for doubtful accountsNo effect	+	Capital stockRetained earningsNo effect
		fill in the blank 17		fill in the blank 18		fill in the blank 19		fill in the blank 20
	Statement of Cash Flows					Income Statement
	FinancingInvestingOperatingNo effect	fill in the blank 22				Cost of merchandise soldNet incomeSalesNo effect		fill in the blank 24