EX 9-17 Entries for bad debt expense under the direct write-off and allowance methods
Spangler Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31, 2012:
|
Customer |
Amount |
|
Will Boyette |
$10,000 |
|
Stan Frey |
8,000 |
|
Tammy Imes |
5,000 |
|
Shana Wagner |
6,000 |
|
Total |
$29,000 |
a. Journalize the write-offs for 2012 under the direct write-off method.
b. Journalize the write-offs for 2012 under the allowance method. Also, journalize the adjusting entry for uncollectible accounts. The company recorded $3,000,000 of credit sales during 2012. Based on past history and industry averages, 1½% of credit sales are expected to be uncollectible.
c. How much higher (lower) would Spangler Company’s 2012 net income have been under the direct write-off method than under the allowance method?