Question

Test 2 Calculator Instructions Chart of Accounts Journal Final Question Instructions Seaforth International wrote off the following accounts receivable as uncollectible for the year ending December 31: Customer Amount Kim Abel S24,400 Lee Drake 30.150 Jenny Green 29,800 Mike Lamb 17,800 Total $102,150 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 $735,000 1% 31 60 days 290,000 2 61 90 days 114,000 15 Previous Next All work saved. Save and Exit Submit Test for Grading

Answer 1

A. Write-offs under direct write off method (journal entry)

Date	Account title and explanation	Debit	Credit
	Bad debts expense	102,150
	Accounts receivables - Kim Abel		24,400
	Accounts receivables - Lee Drake		30,150
	Accounts receivables - Jenny Green		29,800
	Accounts receivables - Mike Lamb		17,800
	(To record write off receivables)

B.Write-offs and the year-end adjusting entry under the allowance method (journal entry)

Computation of Allowance for Uncollectible Accounts
Aging Class	Receivables	% of Uncollectible Accounts	Required Allowance
0-30 days	735,000	1	7,350
31-60 days	290,000	2	5,800
61-90 days	114,000	15	17,100
91–120 days	70,000	30	21,000
More than 120 days	92,000	60	55,200
Total receivables	1,301,000		106,450

Date	Account title and explanation	Debit	Credit
1	Bad debts expense	102,150
	Accounts receivables - Kim Abel		24,400
	Accounts receivables - Lee Drake		30,150
	Accounts receivables - Jenny Green		29,800
	Accounts receivables - Mike Lamb		17,800
	(To record write off receivables)
2	Bad debts expense	120,650
	Allowance for doubtful accounts		120,650
	(To record bad debts expense:106,450 - 87,950 + 102,150)

C.Net income higher (Lower) in allowance method

= Bad debts expense under direct write off method - Bad debts expense under allowance method

=102,150 - 120,650

=(18,500)