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: Apr. 13. Wrote off account of Dean Sheppard, $2,360. May 15. Received $1,180 as partial payment on the $3,140 account of Dan Pyle. Wrote off the remaining balance as uncollectible. July 27. Received $2,360 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 $1,580 Duane DeRosa 1,180 Teresa Galloway 710 Ernie Klatt 990 Marty Richey 350 Dec. 31 If necessary, record the year-end adjusting entry for uncollectible accounts. For those amount boxes in which no entry is required, leave the box blank. If an entry is not required, select "No entry" from the dropdown box(es). a. Journalize the transactions under the direct write-off method. Apr. 13 fill in the blank 5f361afd0fdd07e_2 fill in the blank 5f361afd0fdd07e_4 May 15 fill in the blank 5f361afd0fdd07e_6 fill in the blank 5f361afd0fdd07e_7 fill in the blank 5f361afd0fdd07e_9 fill in the blank 5f361afd0fdd07e_10 fill in the blank 5f361afd0fdd07e_12 fill in the blank 5f361afd0fdd07e_13 July 27-reinstate fill in the blank 5f361afd0fdd07e_15 fill in the blank 5f361afd0fdd07e_17 July 27-collection fill in the blank 5f361afd0fdd07e_19 fill in the blank 5f361afd0fdd07e_21 Dec. 31-write-off fill in the blank 5f361afd0fdd07e_23 fill in the blank 5f361afd0fdd07e_24 fill in the blank 5f361afd0fdd07e_26 fill in the blank 5f361afd0fdd07e_27 fill in the blank 5f361afd0fdd07e_29 fill in the blank 5f361afd0fdd07e_30 fill in the blank 5f361afd0fdd07e_32 fill in the blank 5f361afd0fdd07e_33 fill in the blank 5f361afd0fdd07e_35 fill in the blank 5f361afd0fdd07e_36 fill in the blank 5f361afd0fdd07e_38 fill in the blank 5f361afd0fdd07e_39 Dec. 31-adjusting fill in the blank 5f361afd0fdd07e_41 fill in the blank 5f361afd0fdd07e_43 b. Journalize the transactions 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, 3% of credit sales are expected to be uncollectible. Shipway Company recorded $383,600 of credit sales during the year. Apr. 13 fill in the blank 524ae2f7f065ffc_2 fill in the blank 524ae2f7f065ffc_4 May 15 fill in the blank 524ae2f7f065ffc_6 fill in the blank 524ae2f7f065ffc_7 fill in the blank 524ae2f7f065ffc_9 fill in the blank 524ae2f7f065ffc_10 fill in the blank 524ae2f7f065ffc_12 fill in the blank 524ae2f7f065ffc_13 July 27-reinstate fill in the blank 524ae2f7f065ffc_15 fill in the blank 524ae2f7f065ffc_17 July 27-collection fill in the blank 524ae2f7f065ffc_19 fill in the blank 524ae2f7f065ffc_21 Dec. 31-write-off fill in the blank 524ae2f7f065ffc_23 fill in the blank 524ae2f7f065ffc_24 fill in the blank 524ae2f7f065ffc_26 fill in the blank 524ae2f7f065ffc_27 fill in the blank 524ae2f7f065ffc_29 fill in the blank 524ae2f7f065ffc_30 fill in the blank 524ae2f7f065ffc_32 fill in the blank 524ae2f7f065ffc_33 fill in the blank 524ae2f7f065ffc_35 fill in the blank 524ae2f7f065ffc_36 fill in the blank 524ae2f7f065ffc_38 fill in the blank 524ae2f7f065ffc_39 Dec. 31-adjusting fill in the blank 524ae2f7f065ffc_41 fill in the blank 524ae2f7f065ffc_43 c. How much higher (lower) would Shipway Company’s net income have been under the direct write-off method than under the allowance method? by $fill in the blank 837c13f34f80fce_2
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: Apr. 13. Wrote off account of Dean Sheppard, $2,360. May 15. Received $1,180 as partial payment on the $3,140 account of Dan Pyle. Wrote off the remaining balance as uncollectible. July 27. Received $2,360 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 $1,580 Duane DeRosa 1,180 Teresa Galloway 710 Ernie Klatt 990 Marty Richey 350 Dec. 31 If necessary, record the year-end adjusting entry for uncollectible accounts. For those amount boxes in which no entry is required, leave the box blank. If an entry is not required, select "No entry" from the dropdown box(es). a. Journalize the transactions under the direct write-off method. Apr. 13 fill in the blank 5f361afd0fdd07e_2 fill in the blank 5f361afd0fdd07e_4 May 15 fill in the blank 5f361afd0fdd07e_6 fill in the blank 5f361afd0fdd07e_7 fill in the blank 5f361afd0fdd07e_9 fill in the blank 5f361afd0fdd07e_10 fill in the blank 5f361afd0fdd07e_12 fill in the blank 5f361afd0fdd07e_13 July 27-reinstate fill in the blank 5f361afd0fdd07e_15 fill in the blank 5f361afd0fdd07e_17 July 27-collection fill in the blank 5f361afd0fdd07e_19 fill in the blank 5f361afd0fdd07e_21 Dec. 31-write-off fill in the blank 5f361afd0fdd07e_23 fill in the blank 5f361afd0fdd07e_24 fill in the blank 5f361afd0fdd07e_26 fill in the blank 5f361afd0fdd07e_27 fill in the blank 5f361afd0fdd07e_29 fill in the blank 5f361afd0fdd07e_30 fill in the blank 5f361afd0fdd07e_32 fill in the blank 5f361afd0fdd07e_33 fill in the blank 5f361afd0fdd07e_35 fill in the blank 5f361afd0fdd07e_36 fill in the blank 5f361afd0fdd07e_38 fill in the blank 5f361afd0fdd07e_39 Dec. 31-adjusting fill in the blank 5f361afd0fdd07e_41 fill in the blank 5f361afd0fdd07e_43 b. Journalize the transactions 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, 3% of credit sales are expected to be uncollectible. Shipway Company recorded $383,600 of credit sales during the year. Apr. 13 fill in the blank 524ae2f7f065ffc_2 fill in the blank 524ae2f7f065ffc_4 May 15 fill in the blank 524ae2f7f065ffc_6 fill in the blank 524ae2f7f065ffc_7 fill in the blank 524ae2f7f065ffc_9 fill in the blank 524ae2f7f065ffc_10 fill in the blank 524ae2f7f065ffc_12 fill in the blank 524ae2f7f065ffc_13 July 27-reinstate fill in the blank 524ae2f7f065ffc_15 fill in the blank 524ae2f7f065ffc_17 July 27-collection fill in the blank 524ae2f7f065ffc_19 fill in the blank 524ae2f7f065ffc_21 Dec. 31-write-off fill in the blank 524ae2f7f065ffc_23 fill in the blank 524ae2f7f065ffc_24 fill in the blank 524ae2f7f065ffc_26 fill in the blank 524ae2f7f065ffc_27 fill in the blank 524ae2f7f065ffc_29 fill in the blank 524ae2f7f065ffc_30 fill in the blank 524ae2f7f065ffc_32 fill in the blank 524ae2f7f065ffc_33 fill in the blank 524ae2f7f065ffc_35 fill in the blank 524ae2f7f065ffc_36 fill in the blank 524ae2f7f065ffc_38 fill in the blank 524ae2f7f065ffc_39 Dec. 31-adjusting fill in the blank 524ae2f7f065ffc_41 fill in the blank 524ae2f7f065ffc_43 c. How much higher (lower) would Shipway Company’s net income have been under the direct write-off method than under the allowance method? by $fill in the blank 837c13f34f80fce_2
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
Question
Entries for
The following selected transactions were taken from the records of Shipway Company for the first year of its operations ending December 31:
| Apr. 13. | Wrote off account of Dean Sheppard, $2,360. | ||||||||||
| May 15. | Received $1,180 as partial payment on the $3,140 account of Dan Pyle. Wrote off the remaining balance as uncollectible. | ||||||||||
| July 27. | Received $2,360 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): | ||||||||||
|
|||||||||||
| Dec. 31 | If necessary, record the year-end |
For those amount boxes in which no entry is required, leave the box blank. If an entry is not required, select "No entry" from the dropdown box(es).
a. Journalize the transactions under the direct write-off method.
| Apr. 13 | fill in the blank 5f361afd0fdd07e_2 | ||
| fill in the blank 5f361afd0fdd07e_4 | |||
| May 15 | fill in the blank 5f361afd0fdd07e_6 | fill in the blank 5f361afd0fdd07e_7 | |
| fill in the blank 5f361afd0fdd07e_9 | fill in the blank 5f361afd0fdd07e_10 | ||
| fill in the blank 5f361afd0fdd07e_12 | fill in the blank 5f361afd0fdd07e_13 | ||
| July 27-reinstate | fill in the blank 5f361afd0fdd07e_15 | ||
| fill in the blank 5f361afd0fdd07e_17 | |||
| July 27-collection | fill in the blank 5f361afd0fdd07e_19 | ||
| fill in the blank 5f361afd0fdd07e_21 | |||
| Dec. 31-write-off | fill in the blank 5f361afd0fdd07e_23 | fill in the blank 5f361afd0fdd07e_24 | |
| fill in the blank 5f361afd0fdd07e_26 | fill in the blank 5f361afd0fdd07e_27 | ||
| fill in the blank 5f361afd0fdd07e_29 | fill in the blank 5f361afd0fdd07e_30 | ||
| fill in the blank 5f361afd0fdd07e_32 | fill in the blank 5f361afd0fdd07e_33 | ||
| fill in the blank 5f361afd0fdd07e_35 | fill in the blank 5f361afd0fdd07e_36 | ||
| fill in the blank 5f361afd0fdd07e_38 | fill in the blank 5f361afd0fdd07e_39 | ||
| Dec. 31-adjusting | fill in the blank 5f361afd0fdd07e_41 | ||
| fill in the blank 5f361afd0fdd07e_43 |
b. Journalize the transactions 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, 3% of credit sales are expected to be uncollectible. Shipway Company recorded $383,600 of credit sales during the year.
| Apr. 13 | fill in the blank 524ae2f7f065ffc_2 | ||
| fill in the blank 524ae2f7f065ffc_4 | |||
| May 15 | fill in the blank 524ae2f7f065ffc_6 | fill in the blank 524ae2f7f065ffc_7 | |
| fill in the blank 524ae2f7f065ffc_9 | fill in the blank 524ae2f7f065ffc_10 | ||
| fill in the blank 524ae2f7f065ffc_12 | fill in the blank 524ae2f7f065ffc_13 | ||
| July 27-reinstate | fill in the blank 524ae2f7f065ffc_15 | ||
| fill in the blank 524ae2f7f065ffc_17 | |||
| July 27-collection | fill in the blank 524ae2f7f065ffc_19 | ||
| fill in the blank 524ae2f7f065ffc_21 | |||
| Dec. 31-write-off | fill in the blank 524ae2f7f065ffc_23 | fill in the blank 524ae2f7f065ffc_24 | |
| fill in the blank 524ae2f7f065ffc_26 | fill in the blank 524ae2f7f065ffc_27 | ||
| fill in the blank 524ae2f7f065ffc_29 | fill in the blank 524ae2f7f065ffc_30 | ||
| fill in the blank 524ae2f7f065ffc_32 | fill in the blank 524ae2f7f065ffc_33 | ||
| fill in the blank 524ae2f7f065ffc_35 | fill in the blank 524ae2f7f065ffc_36 | ||
| fill in the blank 524ae2f7f065ffc_38 | fill in the blank 524ae2f7f065ffc_39 | ||
| Dec. 31-adjusting | fill in the blank 524ae2f7f065ffc_41 | ||
| fill in the blank 524ae2f7f065ffc_43 |
c. How much higher (lower) would Shipway Company’s net income have been under the direct write-off method than under the allowance method?
by $fill in the blank 837c13f34f80fce_2
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