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, $2,370. May 15. Received $1,190 as partial payment on the $3,150 account of Dan Pyle. Wrote off the remaining balance as uncollectible. July 27. Received $2,370 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 $1,590 Duane DeRosa 1,190 Teresa Galloway 710 Ernie Klatt 1,000 Marty Richey 360 31. If necessary, record the year-end adjusting entry for the uncollectible accounts. If no entry is required, select "No entry" and leave the amount boxes blank. If an amount box does not require an entry, leave it blank. a. Journalize the transactions under the direct write-off method. Apr. 13 Bad Debt Expense fill in the blank ec25d8f2cff8010_2 fill in the blank ec25d8f2cff8010_3 Accounts Receivable-Dean Sheppard fill in the blank ec25d8f2cff8010_5 fill in the blank ec25d8f2cff8010_6 May 15 Cash fill in the blank ec25d8f2cff8010_8 fill in the blank ec25d8f2cff8010_9 Bad Debt Expense fill in the blank ec25d8f2cff8010_11 fill in the blank ec25d8f2cff8010_12 Accounts Receivable-Dan Pyle fill in the blank ec25d8f2cff8010_14 fill in the blank ec25d8f2cff8010_15 July 27 Accounts Receivable-Dean Sheppard fill in the blank ec25d8f2cff8010_17 fill in the blank ec25d8f2cff8010_18 Bad Debt Expense fill in the blank ec25d8f2cff8010_20 fill in the blank ec25d8f2cff8010_21 July 27 Cash fill in the blank ec25d8f2cff8010_23 fill in the blank ec25d8f2cff8010_24 Accounts Receivable-Dean Sheppard fill in the blank ec25d8f2cff8010_26 fill in the blank ec25d8f2cff8010_27 Dec. 31 Bad Debt Expense fill in the blank ec25d8f2cff8010_29 fill in the blank ec25d8f2cff8010_30 Accounts Receivable-Paul Chapman fill in the blank ec25d8f2cff8010_32 fill in the blank ec25d8f2cff8010_33 Accounts Receivable-Duane DeRosa fill in the blank ec25d8f2cff8010_35 fill in the blank ec25d8f2cff8010_36 Accounts Receivable-Teresa Galloway fill in the blank ec25d8f2cff8010_38 fill in the blank ec25d8f2cff8010_39 Accounts Receivable-Ernie Klatt fill in the blank ec25d8f2cff8010_41 fill in the blank ec25d8f2cff8010_42 Accounts Receivable-Marty Richey fill in the blank ec25d8f2cff8010_44 fill in the blank ec25d8f2cff8010_45 Dec. 31 No entry fill in the blank ec25d8f2cff8010_47 fill in the blank ec25d8f2cff8010_48 No entry fill in the blank ec25d8f2cff8010_50 fill in the blank ec25d8f2cff8010_51 Feedback Remember that under the direct write-off method, Bad Debt Expense is not recorded until the customer's account is determined to be worthless. Under the allowance method once a customer account is identified as uncollectible, it is written off against the allowance account. 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, 1% of credit sales are expected to be uncollectible. Shipway Company recorded $1,157,700 of credit sales during the year. Apr. 13 Allowance for Doubtful Accounts Accounts Receivable-Dean Sheppard May 15 Cash Allowance for Doubtful Accounts Accounts Receivable-Dan Pyle July 27 Accounts Receivable-Dean Sheppard fill in the blank 87dcc3fba038fe9_17 fill in the blank 87dcc3fba038fe9_18 Allowance for Doubtful Accounts fill in the blank 87dcc3fba038fe9_20 fill in the blank 87dcc3fba038fe9_21 July 27 Cash fill in the blank 87dcc3fba038fe9_23 fill in the blank 87dcc3fba038fe9_24 Accounts Receivable-Dean Sheppard fill in the blank 87dcc3fba038fe9_26 fill in the blank 87dcc3fba038fe9_27 Dec. 31 Allowance for Doubtful Accounts fill in the blank 87dcc3fba038fe9_29 fill in the blank 87dcc3fba038fe9_30 Accounts Receivable-Paul Chapman fill in the blank 87dcc3fba038fe9_32 fill in the blank 87dcc3fba038fe9_33 Accounts Receivable-Duane DeRosa Accounts Receivable-Teresa Galloway Accounts Receivable-Ernie Klatt fill in the blank 87dcc3fba038fe9_41 fill in the blank 87dcc3fba038fe9_42 Accounts Receivable-Marty Richey fill in the blank 87dcc3fba038fe9_45 Dec. 31 Bad Debt Expense fill in the blank 87dcc3fba038fe9_47 fill in the blank 87dcc3fba038fe9_48 Allowance for Doubtful Accounts fill in the blank 87dcc3fba038fe9_50 fill in the blank 87dcc3fba038fe9_51 Feedback Remember that under the direct write-off method, Bad Debt Expense is not recorded until the customer's account is determined to be worthless. Under the allowance method once a customer account is identified as uncollectible, it is written off against the allowance account. c. How much higher (lower) would Shipway Company's net income have been under the direct write-off method than under the allowance method?

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, $2,370. May 15. Received $1,190 as partial payment on the $3,150 account of Dan Pyle. Wrote off the remaining balance as uncollectible. July 27. Received $2,370 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 $1,590 Duane DeRosa 1,190 Teresa Galloway 710 Ernie Klatt 1,000 Marty Richey 360 31. If necessary, record the year-end adjusting entry for the uncollectible accounts. If no entry is required, select "No entry" and leave the amount boxes blank. If an amount box does not require an entry, leave it blank. a. Journalize the transactions under the direct write-off method. Apr. 13 Bad Debt Expense fill in the blank ec25d8f2cff8010_2 fill in the blank ec25d8f2cff8010_3 Accounts Receivable-Dean Sheppard fill in the blank ec25d8f2cff8010_5 fill in the blank ec25d8f2cff8010_6 May 15 Cash fill in the blank ec25d8f2cff8010_8 fill in the blank ec25d8f2cff8010_9 Bad Debt Expense fill in the blank ec25d8f2cff8010_11 fill in the blank ec25d8f2cff8010_12 Accounts Receivable-Dan Pyle fill in the blank ec25d8f2cff8010_14 fill in the blank ec25d8f2cff8010_15 July 27 Accounts Receivable-Dean Sheppard fill in the blank ec25d8f2cff8010_17 fill in the blank ec25d8f2cff8010_18 Bad Debt Expense fill in the blank ec25d8f2cff8010_20 fill in the blank ec25d8f2cff8010_21 July 27 Cash fill in the blank ec25d8f2cff8010_23 fill in the blank ec25d8f2cff8010_24 Accounts Receivable-Dean Sheppard fill in the blank ec25d8f2cff8010_26 fill in the blank ec25d8f2cff8010_27 Dec. 31 Bad Debt Expense fill in the blank ec25d8f2cff8010_29 fill in the blank ec25d8f2cff8010_30 Accounts Receivable-Paul Chapman fill in the blank ec25d8f2cff8010_32 fill in the blank ec25d8f2cff8010_33 Accounts Receivable-Duane DeRosa fill in the blank ec25d8f2cff8010_35 fill in the blank ec25d8f2cff8010_36 Accounts Receivable-Teresa Galloway fill in the blank ec25d8f2cff8010_38 fill in the blank ec25d8f2cff8010_39 Accounts Receivable-Ernie Klatt fill in the blank ec25d8f2cff8010_41 fill in the blank ec25d8f2cff8010_42 Accounts Receivable-Marty Richey fill in the blank ec25d8f2cff8010_44 fill in the blank ec25d8f2cff8010_45 Dec. 31 No entry fill in the blank ec25d8f2cff8010_47 fill in the blank ec25d8f2cff8010_48 No entry fill in the blank ec25d8f2cff8010_50 fill in the blank ec25d8f2cff8010_51 Feedback Remember that under the direct write-off method, Bad Debt Expense is not recorded until the customer's account is determined to be worthless. Under the allowance method once a customer account is identified as uncollectible, it is written off against the allowance account. 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, 1% of credit sales are expected to be uncollectible. Shipway Company recorded $1,157,700 of credit sales during the year. Apr. 13 Allowance for Doubtful Accounts Accounts Receivable-Dean Sheppard May 15 Cash Allowance for Doubtful Accounts Accounts Receivable-Dan Pyle July 27 Accounts Receivable-Dean Sheppard fill in the blank 87dcc3fba038fe9_17 fill in the blank 87dcc3fba038fe9_18 Allowance for Doubtful Accounts fill in the blank 87dcc3fba038fe9_20 fill in the blank 87dcc3fba038fe9_21 July 27 Cash fill in the blank 87dcc3fba038fe9_23 fill in the blank 87dcc3fba038fe9_24 Accounts Receivable-Dean Sheppard fill in the blank 87dcc3fba038fe9_26 fill in the blank 87dcc3fba038fe9_27 Dec. 31 Allowance for Doubtful Accounts fill in the blank 87dcc3fba038fe9_29 fill in the blank 87dcc3fba038fe9_30 Accounts Receivable-Paul Chapman fill in the blank 87dcc3fba038fe9_32 fill in the blank 87dcc3fba038fe9_33 Accounts Receivable-Duane DeRosa Accounts Receivable-Teresa Galloway Accounts Receivable-Ernie Klatt fill in the blank 87dcc3fba038fe9_41 fill in the blank 87dcc3fba038fe9_42 Accounts Receivable-Marty Richey fill in the blank 87dcc3fba038fe9_45 Dec. 31 Bad Debt Expense fill in the blank 87dcc3fba038fe9_47 fill in the blank 87dcc3fba038fe9_48 Allowance for Doubtful Accounts fill in the blank 87dcc3fba038fe9_50 fill in the blank 87dcc3fba038fe9_51 Feedback Remember that under the direct write-off method, Bad Debt Expense is not recorded until the customer's account is determined to be worthless. Under the allowance method once a customer account is identified as uncollectible, it is written off against the allowance account. c. How much higher (lower) would Shipway Company's net income have been under the direct write-off method than under the allowance method?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Concept explainers

Question

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, $2,370.

May 15.

Received $1,190 as partial payment on the $3,150 account of Dan Pyle. Wrote off the remaining balance as uncollectible.

July 27.

Received $2,370 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	$1,590
Duane DeRosa	1,190
Teresa Galloway	710
Ernie Klatt	1,000
Marty Richey	360

31.

If necessary, record the year-end adjusting entry for the uncollectible accounts.

If no entry is required, select "No entry" and leave the amount boxes blank. If an amount box does not require an entry, leave it blank.

a. Journalize the transactions under the direct write-off method.

Apr. 13	Bad Debt Expense	fill in the blank ec25d8f2cff8010_2	fill in the blank ec25d8f2cff8010_3
	Accounts Receivable-Dean Sheppard	fill in the blank ec25d8f2cff8010_5	fill in the blank ec25d8f2cff8010_6
May 15	Cash	fill in the blank ec25d8f2cff8010_8	fill in the blank ec25d8f2cff8010_9
	Bad Debt Expense	fill in the blank ec25d8f2cff8010_11	fill in the blank ec25d8f2cff8010_12
	Accounts Receivable-Dan Pyle	fill in the blank ec25d8f2cff8010_14	fill in the blank ec25d8f2cff8010_15
July 27	Accounts Receivable-Dean Sheppard	fill in the blank ec25d8f2cff8010_17	fill in the blank ec25d8f2cff8010_18
	Bad Debt Expense	fill in the blank ec25d8f2cff8010_20	fill in the blank ec25d8f2cff8010_21
July 27	Cash	fill in the blank ec25d8f2cff8010_23	fill in the blank ec25d8f2cff8010_24
	Accounts Receivable-Dean Sheppard	fill in the blank ec25d8f2cff8010_26	fill in the blank ec25d8f2cff8010_27
Dec. 31	Bad Debt Expense	fill in the blank ec25d8f2cff8010_29	fill in the blank ec25d8f2cff8010_30
	Accounts Receivable-Paul Chapman	fill in the blank ec25d8f2cff8010_32	fill in the blank ec25d8f2cff8010_33
	Accounts Receivable-Duane DeRosa	fill in the blank ec25d8f2cff8010_35	fill in the blank ec25d8f2cff8010_36
	Accounts Receivable-Teresa Galloway	fill in the blank ec25d8f2cff8010_38	fill in the blank ec25d8f2cff8010_39
	Accounts Receivable-Ernie Klatt	fill in the blank ec25d8f2cff8010_41	fill in the blank ec25d8f2cff8010_42
	Accounts Receivable-Marty Richey	fill in the blank ec25d8f2cff8010_44	fill in the blank ec25d8f2cff8010_45
Dec. 31	No entry	fill in the blank ec25d8f2cff8010_47	fill in the blank ec25d8f2cff8010_48
	No entry	fill in the blank ec25d8f2cff8010_50	fill in the blank ec25d8f2cff8010_51

Feedback

Remember that under the direct write-off method, Bad Debt Expense is not recorded until the customer's account is determined to be worthless.

Under the allowance method once a customer account is identified as uncollectible, it is written off against the allowance account.

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, 1% of credit sales are expected to be uncollectible. Shipway Company recorded $1,157,700 of credit sales during the year.

Apr. 13	Allowance for Doubtful Accounts
	Accounts Receivable-Dean Sheppard
May 15	Cash
	Allowance for Doubtful Accounts
	Accounts Receivable-Dan Pyle
July 27	Accounts Receivable-Dean Sheppard	fill in the blank 87dcc3fba038fe9_17	fill in the blank 87dcc3fba038fe9_18
	Allowance for Doubtful Accounts	fill in the blank 87dcc3fba038fe9_20	fill in the blank 87dcc3fba038fe9_21
July 27	Cash	fill in the blank 87dcc3fba038fe9_23	fill in the blank 87dcc3fba038fe9_24
	Accounts Receivable-Dean Sheppard	fill in the blank 87dcc3fba038fe9_26	fill in the blank 87dcc3fba038fe9_27
Dec. 31	Allowance for Doubtful Accounts	fill in the blank 87dcc3fba038fe9_29	fill in the blank 87dcc3fba038fe9_30
	Accounts Receivable-Paul Chapman	fill in the blank 87dcc3fba038fe9_32	fill in the blank 87dcc3fba038fe9_33
	Accounts Receivable-Duane DeRosa
	Accounts Receivable-Teresa Galloway
	Accounts Receivable-Ernie Klatt	fill in the blank 87dcc3fba038fe9_41	fill in the blank 87dcc3fba038fe9_42
	Accounts Receivable-Marty Richey		fill in the blank 87dcc3fba038fe9_45
Dec. 31	Bad Debt Expense	fill in the blank 87dcc3fba038fe9_47	fill in the blank 87dcc3fba038fe9_48
	Allowance for Doubtful Accounts	fill in the blank 87dcc3fba038fe9_50	fill in the blank 87dcc3fba038fe9_51

Feedback

Remember that under the direct write-off method, Bad Debt Expense is not recorded until the customer's account is determined to be worthless.

Under the allowance method once a customer account is identified as uncollectible, it is written off against the allowance account.

c. How much higher (lower) would Shipway Company's net income have been under the direct write-off method than under the allowance method?
Higher by $fill in the blank 45288a04207af81_2

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 4 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.