Complete all of the requirements listed accounting/econ **Educational Content: Accounting for Bad Debts Using Allowance and Direct Write-off Methods**---**Background Information:**On August 31, 2024, Hewes Floral Supply reported the following:- Accounts Receivable Debit Balance: $145,000- Allowance for Bad Debts Credit Balance: $5,800During September, the following transactions occurred:- Sales on Account: $530,000. (Note: Ignore Cost of Goods Sold)- Collections on Account: $573,000- Write-offs of Uncollectible Receivables: $3,000**Instructions:****Requirement 1.** Journalize September entries using the *allowance method*. Bad Debts Expense is estimated at 3% of credit sales. Display all September activity in Accounts Receivable, Allowance for Bad Debts, and Bad Debts Expense. These entries should be posted to T-accounts.**Journalizing Process:**- Record debits first, followed by credits.- Provide an explanation on the last line of the journal entry table.**Journal Entry Template:**| Date | Accounts and Explanation | Debit | Credit ||------------|---------------------------|-------|--------|| Sep. 30 | | | || | | | |**Further Requirements:**1. **Allowance Method:** - Use the allowance method to journalize all entries for September. - Estimate the Bad Debts Expense as 3% of credit sales ($530,000). - Post these entries to Accounts Receivable, Allowance for Bad Debts, and Bad Debts Expense T-accounts.2. **Direct Write-off Method:** - Alternatively, apply the direct write-off method to journalize September entries. - Reflect these in the balances for Accounts Receivable and Bad Debts Expense as of September 30, 2024.3. **Comparison of Bad Debts Expense:** - Evaluate the Bad Debts Expense reported on the September income statement for both methods. - Discuss which method better aligns expenses with revenues, providing justification for the choice.4. **Net Accounts Receivable:** - Assess the net accounts receivable amount on the September 30, 2024 balance sheet under each method. - Determine which amount appears more realistic, offering reasoning for the conclusion.**Instructions for Interaction:**- Click "Print" to obtain a hard

Under allowance method , it sets aside an allowance for possible bad debts (Calculated as a portion…

On August 31, 2024, Hewes Floral Supply had a $145,000 debit balance in Accounts Receivable and a $5,800 credit balance in Allowance for Bad Debts. During September, Hewes made: • Sales on account, $530,000. Ignore Cost of Goods Sold. . Collections on account, $573,000. • Write-offs of uncollectible receivables, $3,000. Read the requirements. Requirement 1. Journalize all September entries using the allowance method. Bad Debts Expense was estimated at 3% of credit sales. Show all September activity in Accounts Receivable, Allowance for Bad Debts, and Bad Debts Expense (post to these T-accounts). Begin by journalizing all September entries using the allowance method. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Sales on account, $530,000. Ignore Cost of Goods Sold. Accounts and Explanation Date Sep. 30 Debit Credit Requirements 1. Journalize all September entries using the allowance method. Bad debts expense was estimated at 3% of credit sales. Show all September activity in Accounts Receivable, Allowance for Bad Debts, and Bad Debts Expense (post to these T-accounts). 2. Using the same facts, assume that Hewes used the direct write-off method to account for uncollectible receivables. Journalize all September entries using the direct write-off method. Post to Accounts Receivable and Bad Debts Expense, and show their balances at September 30, 2024. 3. What amount of Bad Debts Expense would Hewes report on its September income statement under each of the two methods? Which amount better matches expense with revenue? Give your reason. 4. What amount of net accounts receivable would Hewes report on its September 30, 2024, balance sheet under each of the two methods? Which amount is more realistic? Give your reason. Print Done

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q