The following data were associated with the accounts receivable and uncollectible accounts of Hilton, Inc., during 2003:
a. The opening credit balance in Allowance for Bad Debts was $900,000 at January 1, 2003.
b. During 2003, the company realized that specific accounts receivable totaling $920,000 had gone bad and had been written off.
c. An account receivable of $50,000 was collected during 2003. This account had previously been written off as a bad debt in 2002.
d. The company decided that Allowance for Bad Debts would be $920,000 at the end of2003.
1. Prepare journal entries to show how these events would be recognized in the accounting system using:
a. The direct write off method.
b. The allowance method.
2. Discuss the advantages and disadvantages of each method with respect to the matching principle.