Question

Journalize entries to record P9-SA At December 31, 2017, the trial balance of Darby Company contained the following amounts before adjustment. transactions related to bad debts. Debit Credit (LO 2) Accounts Receivable Allowance for Doubtful Accounts Sales Revenue $385,000 $ 1,000 970,000 Instructions (a) Based on the information given, which method of accounting for bad debts is Darby Com- pany using-the direct write-off method or the allowance method? How can you tell? (b) Prepare the adjusting entry at December 31, 2017, for bad debt expense under each of the following independent assumptions. (1) An aging schedule indicates that $11,750 of accounts receivable will be uncollectible. (2) The company estimates that 1% of sales will be uncollectible. (c) Repeat part (b) assuming that instead of a credit balance there is a $1,000 debit bal- ance in Allowance for Doubtful Accounts. (d) During the next month, January 2018, a $3,000 account receivable is written off as uncollectible. Prepare the journal entry to record the write-off. (e) Repeat part (d) assuming that Darby uses the direct write-off method instead of the allowance method in accounting for uncollectible accounts receivable. (D) how accounts receivable is reported on the balance sheet at the end of the accounting period? (b) (2) 59,700 What type of account is Allowance for Doubtful Accounts? How does it affect

Answer 1

a)	Allowance method
b)
1)	Account titles				Debit	Credit
	Bad debts expense				10750
	allowance for doubtful accounts					10750
2)	Bad debts expense				9700
	allowance for doubtful accounts					9700
c)
1)	Account titles				Debit	Credit
	Bad debts expense				12750
	allowance for doubtful accounts					12750
2)	Bad debts expense				9700
	allowance for doubtful accounts					9700
d)	Account titles				Debit	Credit
	Allowance for doubtful accounts				3,000
	Account receivable					3,000
e)	Account titles				Debit	Credit
	Bad debts expense				3,000
	Account receivable					3,000
f)	Allowance for Doubtful accounts is a contra asset account
	it nets against the total receivables to be presented on the
	Balance sheet ,thus it reflects the amount which is expected to be paid