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direct write-off and allowance Methods

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direct write-off and allowance Methods;EX 8-13 Entries for bad debt expense under the direct write-off and allowance;Methods The following selected transactions were taken from the records of Shipway Company for the first year of its operations ending December 31, 2014;Apr. 13. Wrote off account of Dean Sheppard, $8,450.;May 15. Received $500 as partial payment on the $7,100 account of Dan Pyle. Wrote off;the remaining balance as uncollectible.;July 27. Received $8,450 from Dean Sheppard, whose account had been written off on April 13. Reinstated the account and recorded the cash receipt.;Dec. 31. Wrote off the following accounts as uncollectible (record as one journal entry);Paul Chapman;$2,225;Duane DeRosa;3,550;Teresa Galloway;4,770;Ernie Klatt;1,275;Marty Richey;1,690;31. If necessary, record the year-end adjusting entry for uncollectible accounts.;a. Journalize the transactions for 2014 under the direct write-off method.;b. Journalize the transactions for 2014 under the allowance method. Shipway Company uses the percent of credit sales method of estimating uncollectible accounts expense. Based on past history and industry averages, ?% of credit sales are expected to be uncollectible. Shipway Company recorded $3,778,000 of credit sales during 2014.;c. How much higher (lower) would Shipway Company?s net income have been under the direct write-off method than under the allowance method?

 

Paper#29317 | Written in 18-Jul-2015

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