1. Ace Plus is a home improvement store that began operations last year. On December 31st of the first year of operations, Ace Plus had accounts receivable totaling $50,000 and the store’s manager, Bill Henrickson, estimated that $1,500 of those receivables will not be collected. On January 17 of Year 2, Ace Plus decided to write off as uncollectible a $500 receivable owed by Roman Grant. Benny, the new accountant at Ace Plus, is struggling with receivables. Please advise him by answering the questions below. Assume Ace Plus uses the Allowance method for write-offs. 1. What should the December 31st journal entry look like? 2. What should the January 17th journal entry look like? 3. What type of account is Allowance for Doubtful Accounts and what type of balance does it have, debit or credit? 4. Briefly explain why a company might use the Direct Write-Off method instead of the Allowance method? Does it even make a difference?
1. Ace Plus is a home improvement store that began operations last year. On December 31st of the first year of operations, Ace Plus had
On January 17 of Year 2, Ace Plus decided to write off as uncollectible a $500 receivable owed by Roman Grant.
Benny, the new accountant at Ace Plus, is struggling with receivables. Please advise him by answering the questions below. Assume Ace Plus uses the Allowance method for write-offs.
1. What should the December 31st
2. What should the January 17th journal entry look like?
3. What type of account is Allowance for Doubtful Accounts and what type of balance does it have, debit or credit?
4. Briefly explain why a company might use the Direct Write-Off method instead of the Allowance method? Does it even make a difference?
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