a. Journalize the transactions under the direct write-off method. June 8. fill in the blank bf7117f8305e074_2 fill in the blank bf7117f8305e074_3 fill in the blank bf7117f8305e074_5 fill in the blank bf7117f8305e074_6 Aug. 14 fill in the blank bf7117f8305e074_8 fill in the blank bf7117f8305e074_9 fill in the blank bf7117f8305e074_11 fill in the blank bf7117f8305e074_12 fill in the blank bf7117f8305e074_14 fill in the blank bf7117f8305e074_15 Oct.16-reinstate fill in the blank bf7117f8305e074_17 fill in the blank bf7117f8305e074_18 fill in the blank bf7117f8305e074_20 fill in the blank bf7117f8305e074_21 Oct.16-collection fill in the blank bf7117f8305e074_23 fill in the blank bf7117f8305e074_24 fill in the blank bf7117f8305e074_26 fill in the blank bf7117f8305e074_27 Dec. 31-write-off fill in the blank bf7117f8305e074_29 fill in the blank bf7117f8305e074_30 fill in the blank bf7117f8305e074_32 fill in the blank bf7117f8305e074_33 fill in the blank bf7117f8305e074_35 fill in the blank bf7117f8305e074_36 fill in the blank bf7117f8305e074_38 fill in the blank bf7117f8305e074_39 fill in the blank bf7117f8305e074_41 fill in the blank bf7117f8305e074_42 fill in the blank bf7117f8305e074_44 fill in the blank bf7117f8305e074_45 Dec. 31-adjusting fill in the blank bf7117f8305e074_47 fill in the blank bf7117f8305e074_48 fill in the blank bf7117f8305e074_50 fill in the blank bf7117f8305e074_51 b. Journalize the transactions under the allowance method, assuming that the allowance account had a beginning credit balance of $25,620 on January 1 and the company uses the analysis of receivables method. June 8. fill in the blank 8cf655f8bfbffe7_2 fill in the blank 8cf655f8bfbffe7_3 fill in the blank 8cf655f8bfbffe7_5 fill in the blank 8cf655f8bfbffe7_6 Aug. 14 fill in the blank 8cf655f8bfbffe7_8 fill in the blank 8cf655f8bfbffe7_9 fill in the blank 8cf655f8bfbffe7_11 fill in the blank 8cf655f8bfbffe7_12 fill in the blank 8cf655f8bfbffe7_14 fill in the blank 8cf655f8bfbffe7_15 Oct.16-reinstate fill in the blank 8cf655f8bfbffe7_17 fill in the blank 8cf655f8bfbffe7_18 fill in the blank 8cf655f8bfbffe7_20 fill in the blank 8cf655f8bfbffe7_21 Oct.16-collection fill in the blank 8cf655f8bfbffe7_23 fill in the blank 8cf655f8bfbffe7_24 fill in the blank 8cf655f8bfbffe7_26 fill in the blank 8cf655f8bfbffe7_27 Dec. 31-write-off fill in the blank 8cf655f8bfbffe7_29 fill in the blank 8cf655f8bfbffe7_30 fill in the blank 8cf655f8bfbffe7_32 fill in the blank 8cf655f8bfbffe7_33 fill in the blank 8cf655f8bfbffe7_35 fill in the blank 8cf655f8bfbffe7_36 fill in the blank 8cf655f8bfbffe7_38 fill in the blank 8cf655f8bfbffe7_39 fill in the blank 8cf655f8bfbffe7_41 fill in the blank 8cf655f8bfbffe7_42 fill in the blank 8cf655f8bfbffe7_44 fill in the blank 8cf655f8bfbffe7_45 Dec. 31-adjusting fill in the blank 8cf655f8bfbffe7_47 fill in the blank 8cf655f8bfbffe7_48 fill in the blank 8cf655f8bfbffe7_50 fill in the blank 8cf655f8bfbffe7_51 c. How much higher (lower) would Rustic Tables’ net income have been under the direct write-off method than under the allowance method?

a. Journalize the transactions under the direct write-off method. June 8. fill in the blank bf7117f8305e074_2 fill in the blank bf7117f8305e074_3 fill in the blank bf7117f8305e074_5 fill in the blank bf7117f8305e074_6 Aug. 14 fill in the blank bf7117f8305e074_8 fill in the blank bf7117f8305e074_9 fill in the blank bf7117f8305e074_11 fill in the blank bf7117f8305e074_12 fill in the blank bf7117f8305e074_14 fill in the blank bf7117f8305e074_15 Oct.16-reinstate fill in the blank bf7117f8305e074_17 fill in the blank bf7117f8305e074_18 fill in the blank bf7117f8305e074_20 fill in the blank bf7117f8305e074_21 Oct.16-collection fill in the blank bf7117f8305e074_23 fill in the blank bf7117f8305e074_24 fill in the blank bf7117f8305e074_26 fill in the blank bf7117f8305e074_27 Dec. 31-write-off fill in the blank bf7117f8305e074_29 fill in the blank bf7117f8305e074_30 fill in the blank bf7117f8305e074_32 fill in the blank bf7117f8305e074_33 fill in the blank bf7117f8305e074_35 fill in the blank bf7117f8305e074_36 fill in the blank bf7117f8305e074_38 fill in the blank bf7117f8305e074_39 fill in the blank bf7117f8305e074_41 fill in the blank bf7117f8305e074_42 fill in the blank bf7117f8305e074_44 fill in the blank bf7117f8305e074_45 Dec. 31-adjusting fill in the blank bf7117f8305e074_47 fill in the blank bf7117f8305e074_48 fill in the blank bf7117f8305e074_50 fill in the blank bf7117f8305e074_51 b. Journalize the transactions under the allowance method, assuming that the allowance account had a beginning credit balance of $25,620 on January 1 and the company uses the analysis of receivables method. June 8. fill in the blank 8cf655f8bfbffe7_2 fill in the blank 8cf655f8bfbffe7_3 fill in the blank 8cf655f8bfbffe7_5 fill in the blank 8cf655f8bfbffe7_6 Aug. 14 fill in the blank 8cf655f8bfbffe7_8 fill in the blank 8cf655f8bfbffe7_9 fill in the blank 8cf655f8bfbffe7_11 fill in the blank 8cf655f8bfbffe7_12 fill in the blank 8cf655f8bfbffe7_14 fill in the blank 8cf655f8bfbffe7_15 Oct.16-reinstate fill in the blank 8cf655f8bfbffe7_17 fill in the blank 8cf655f8bfbffe7_18 fill in the blank 8cf655f8bfbffe7_20 fill in the blank 8cf655f8bfbffe7_21 Oct.16-collection fill in the blank 8cf655f8bfbffe7_23 fill in the blank 8cf655f8bfbffe7_24 fill in the blank 8cf655f8bfbffe7_26 fill in the blank 8cf655f8bfbffe7_27 Dec. 31-write-off fill in the blank 8cf655f8bfbffe7_29 fill in the blank 8cf655f8bfbffe7_30 fill in the blank 8cf655f8bfbffe7_32 fill in the blank 8cf655f8bfbffe7_33 fill in the blank 8cf655f8bfbffe7_35 fill in the blank 8cf655f8bfbffe7_36 fill in the blank 8cf655f8bfbffe7_38 fill in the blank 8cf655f8bfbffe7_39 fill in the blank 8cf655f8bfbffe7_41 fill in the blank 8cf655f8bfbffe7_42 fill in the blank 8cf655f8bfbffe7_44 fill in the blank 8cf655f8bfbffe7_45 Dec. 31-adjusting fill in the blank 8cf655f8bfbffe7_47 fill in the blank 8cf655f8bfbffe7_48 fill in the blank 8cf655f8bfbffe7_50 fill in the blank 8cf655f8bfbffe7_51 c. How much higher (lower) would Rustic Tables’ net income have been under the direct write-off method than under the allowance method?

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter8: Receivables

Section: Chapter Questions

Problem 14E: Entries for bad debt expense under the direct write-off and allowance methods The following selected...

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Entries for Bad Debt Expense Under the Direct Write-Off and Allowance Methods

The following selected transactions were taken from the records of Rustic Tables Company for the year ending December 31:

June 8.	Wrote off account of Kathy Quantel, $8,540.
Aug. 14.	Received $6,060 as partial payment on the $15,290 account of Rosalie Oakes. Wrote off the remaining balance as uncollectible.
Oct. 16.	Received the $8,540 from Kathy Quantel, whose account had been written off on June 8. Reinstated the account and recorded the cash receipt.
Dec. 31	Wrote off the following accounts as uncollectible (record as one journal entry):

Wade Dolan	$2,480
Greg Gagne	1,540
Amber Kisko	5,890
Shannon Poole	3,420
Niki Spence	940

Dec. 31 If necessary, record the year-end adjusting entry for uncollectible accounts.

Rustic Tables Company prepared the following aging schedule for its accounts receivable:

Aging Class (Number of Days Past Due)	Receivables Balance on December 31	Estimated Percent of Uncollectible Accounts
			0-30 days	$410,000	2%
			31-60 days	154,000	7
			61-90 days	49,000	20
			91-120 days	18,000	45
			More than 120 days	25,000	80
			Total receivables	$656,000

If an amount box does not require an entry, leave it blank. If an account is not required, select "No Entry" from the dropdown box(es).

a. Journalize the transactions under the direct write-off method.

June 8.	fill in the blank bf7117f8305e074_2	fill in the blank bf7117f8305e074_3
	fill in the blank bf7117f8305e074_5	fill in the blank bf7117f8305e074_6
Aug. 14	fill in the blank bf7117f8305e074_8	fill in the blank bf7117f8305e074_9
	fill in the blank bf7117f8305e074_11	fill in the blank bf7117f8305e074_12
	fill in the blank bf7117f8305e074_14	fill in the blank bf7117f8305e074_15
Oct.16-reinstate	fill in the blank bf7117f8305e074_17	fill in the blank bf7117f8305e074_18
	fill in the blank bf7117f8305e074_20	fill in the blank bf7117f8305e074_21
Oct.16-collection	fill in the blank bf7117f8305e074_23	fill in the blank bf7117f8305e074_24
	fill in the blank bf7117f8305e074_26	fill in the blank bf7117f8305e074_27
Dec. 31-write-off	fill in the blank bf7117f8305e074_29	fill in the blank bf7117f8305e074_30
	fill in the blank bf7117f8305e074_32	fill in the blank bf7117f8305e074_33
	fill in the blank bf7117f8305e074_35	fill in the blank bf7117f8305e074_36
	fill in the blank bf7117f8305e074_38	fill in the blank bf7117f8305e074_39
	fill in the blank bf7117f8305e074_41	fill in the blank bf7117f8305e074_42
	fill in the blank bf7117f8305e074_44	fill in the blank bf7117f8305e074_45
Dec. 31-adjusting	fill in the blank bf7117f8305e074_47	fill in the blank bf7117f8305e074_48
	fill in the blank bf7117f8305e074_50	fill in the blank bf7117f8305e074_51

b. Journalize the transactions under the allowance method, assuming that the allowance account had a beginning credit balance of $25,620 on January 1 and the company uses the analysis of receivables method.

June 8.	fill in the blank 8cf655f8bfbffe7_2	fill in the blank 8cf655f8bfbffe7_3
	fill in the blank 8cf655f8bfbffe7_5	fill in the blank 8cf655f8bfbffe7_6
Aug. 14	fill in the blank 8cf655f8bfbffe7_8	fill in the blank 8cf655f8bfbffe7_9
	fill in the blank 8cf655f8bfbffe7_11	fill in the blank 8cf655f8bfbffe7_12
	fill in the blank 8cf655f8bfbffe7_14	fill in the blank 8cf655f8bfbffe7_15
Oct.16-reinstate	fill in the blank 8cf655f8bfbffe7_17	fill in the blank 8cf655f8bfbffe7_18
	fill in the blank 8cf655f8bfbffe7_20	fill in the blank 8cf655f8bfbffe7_21
Oct.16-collection	fill in the blank 8cf655f8bfbffe7_23	fill in the blank 8cf655f8bfbffe7_24
	fill in the blank 8cf655f8bfbffe7_26	fill in the blank 8cf655f8bfbffe7_27
Dec. 31-write-off	fill in the blank 8cf655f8bfbffe7_29	fill in the blank 8cf655f8bfbffe7_30
	fill in the blank 8cf655f8bfbffe7_32	fill in the blank 8cf655f8bfbffe7_33
	fill in the blank 8cf655f8bfbffe7_35	fill in the blank 8cf655f8bfbffe7_36
	fill in the blank 8cf655f8bfbffe7_38	fill in the blank 8cf655f8bfbffe7_39
	fill in the blank 8cf655f8bfbffe7_41	fill in the blank 8cf655f8bfbffe7_42
	fill in the blank 8cf655f8bfbffe7_44	fill in the blank 8cf655f8bfbffe7_45
Dec. 31-adjusting	fill in the blank 8cf655f8bfbffe7_47	fill in the blank 8cf655f8bfbffe7_48
	fill in the blank 8cf655f8bfbffe7_50	fill in the blank 8cf655f8bfbffe7_51

c. How much higher (lower) would Rustic Tables’ net income have been under the direct write-off method than under the allowance method?
by fill in the blank e0e14b00601df9a_2

Expert Solution

Step 1

Bad Debt Expense - This Expense Arise from the Fact that when the debtors is unable to pay his outstanding and company feel to book it as expense . There are different method to calculate the Bad Debt Expense.

Direct write off Method - In this method, the uncollectible Accounts Receivable are directly written off as the Bad Debt Expense and the expense is shown in the Income Statement.

Allowance method - In this method, the company doesnt wait for accounts to become uncollectible , its based on certain trend will decide the percentage uncollectible and will move it to reserve account

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