Casebolt Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31: Customer Amount Shawn Brooke $4,650 Eve Denton 5,180 Art Malloy 11,050 Cassie Yost 9,120 Total $30,000 Question Content Area a. Journalize the write-offs under the direct write-off method. If an amount box does not require an entry, leave it blank. 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, 3/4% of credit sales are expected to be uncollectible. If an amount box does not require an entry, leave it blank.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Casebolt Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31:
| Customer | Amount |
|---|---|
| Shawn Brooke | $4,650 |
| Eve Denton | 5,180 |
| Art Malloy | 11,050 |
| Cassie Yost | 9,120 |
| Total | $30,000 |
Question Content Area
a. Journalize the write-offs under the direct write-off method. If an amount box does not require an entry, leave it blank.
b. Journalize the write-offs under the allowance method. Also, journalize the
Accounts receivables is the amount to be collected from the customers. The sales on account results in accounts receivables.
Under direct off method, bad debt expense is used to write-off the uncollectible.
Decrease in assets is credited in the journal entry.
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