FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Casebolt Company wrote off the following accounts receivable as uncollectible for the
first year of its operations ending December 31:
Customer
Amount
$ 4,650
Shawn Brooke
Eve Denton
5,180
Art Malloy
11,050
Cassie Yost
9,120
Total
$30,000
a. Journalize the write-offs under the direct write-off method.
b. Journalize the write-offs under the allowance method. Also, journalize the adjusting
entry for uncollectible accounts. The company recorded $5,250,000 of credit sales
during the year. Based on past history and industry averages, 4% of credit sales are
expected to be uncollectible.
c. How much higher (lower) would Casebolt Company's net income have been under
the direct write-off method than under the allowance method?
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Transcribed Image Text:Casebolt Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31: Customer Amount $ 4,650 Shawn Brooke Eve Denton 5,180 Art Malloy 11,050 Cassie Yost 9,120 Total $30,000 a. Journalize the write-offs under the direct write-off method. b. Journalize the write-offs under the allowance method. Also, journalize the adjusting entry for uncollectible accounts. The company recorded $5,250,000 of credit sales during the year. Based on past history and industry averages, 4% of credit sales are expected to be uncollectible. c. How much higher (lower) would Casebolt Company's net income have been under the direct write-off method than under the allowance method?
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