Maurice Tutor
$15/per page/Negotiable
EX 9-14 Entries for bad debt expense under the direct write-off and allowance methods
The following selected transactions were taken from the records of Silhouette Company for the year ending December 31, 2012:
|
Mar. 4. |
Wrote off account of Myron Rimando, $7,500. |
|
|
May 19. |
Received $2,000 as partial payment on the $10,000 account of Shirley Mason. Wrote off the remaining balance as uncollectible. |
|
|
Aug. 7. |
Received the $7,500 from Myron Rimando, which had been written off on March 4. Reinstated the account and recorded the cash receipt. |
|
|
Dec. 31. |
Wrote off the following accounts as uncollectible (record as one journal entry): |
|
| Â | Â | |
| Â |
Brandon Peele |
$ 5,000 |
| Â |
Clyde Stringer |
9,000 |
| Â |
Ned Berry |
13,000 |
| Â |
Mary Adams |
2,000 |
| Â |
Gina Bowers |
4,500 |
| Â | Â | |
|
Dec. 31. |
Wrote off the following accounts as uncollectible (record as one journal entry): |
|
a. Journalize the transactions for 2012 under the direct write-off method.
b. Journalize the transactions for 2012 under the allowance method, assuming that the allowance account had a beginning balance of $45,000 on January 1, 2012, and the company uses the analysis of receivables method. Silhouette Company prepared the following aging schedule for its accounts receivable:
|
Aging Class (Number |
Receivables Balance |
Estimated Percent of |
|
of Days Past Due) |
on December 31 |
Uncollectible Accounts |
|
0–30 days |
$300,000 |
1% |
|
31–60 days |
80,000 |
4 |
|
61–90 days |
20,000 |
15 |
|
91–120 days |
10,000 |
40 |
|
More than 120 days |
40,000 |
80 |
|
Total receivables |
$450,000 |
 |
c. How much higher (lower) would Silhouette’s 2012 net income have been under the direct write-off method than under the allowance method?