Paul Chapman $2,225 Duane DeRosa 3,550 Teresa Galloway 4,770 Ernie Klatt 1,275 Marty Richey 1,690

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The following selected transactions were taken from the records of Shipway Company for the first year of its operations ending December 31:

apr13 Wrote off account of Dean Sheppard, $8,450
may15 Received $500 as partial payment on the $7,100 account of Dan Pyle. Wrote off the remaining balance as uncollectible
july27 Received $8,450 from Dean Sheppard, whose account had been written off on April 13. Reinstated the account and recorded the cash receipt.
dec31 Wrote off the following accounts as uncollectible (record as one journal entry):

31. If necessary, record the year-end adjusting entry for uncollectible accounts.
a. Journalize the transactions under the direct write-off method.
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, ¾% of credit sales are expected to be
uncollectible. Shipway Company recorded $3,778,000 of credit sales during the year.
c. How much higher (lower) would Shipway Company’s
net income have been under the direct write-off method than under the allowance
method?

Paul Chapman
$2,225
Duane DeRosa
3,550
Teresa Galloway
4,770
Ernie Klatt
1,275
Marty Richey
1,690
Transcribed Image Text:Paul Chapman $2,225 Duane DeRosa 3,550 Teresa Galloway 4,770 Ernie Klatt 1,275 Marty Richey 1,690
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