The following selected transactions were taken from the records of Rustic Tables Company for the year ending December 31:June 8. Wrote off account of Kathy Quantel, $8,150.Aug. 14. Received $5,790 as partial payment on the $14,590 account of Rosalie Oakes. Wrote off the remaining balance as uncollectible.Oct. 16. Received the $8,150 from Kathy Quantel, whose account had been written off on June 8. Reinstated the account and recorded the cashreceipt.Dec. 31. Wrote off the following accounts as uncollectible (record as one journal entry):Wade Dolan$2,360Greg Gagne1,470Amber Kisko5,620Shannon Poole3,260Niki Spence900Dec. 31.If necessary, record the year-end adjusting entry for 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.June 8 Bad Debt ExpenseAccounts Receivable-Kathy QuantelAug. 14 CashBad Debt ExpenseAccounts Receivable-Rosalie OakesOct. 16 Accounts Receivable-Kathy QuantelBad Debt ExpenseOct. 16 CashAccounts Receivable-Kathy QuantelDec. 31 Bad Debt ExpenseAccounts Receivable-Wade DolanAccounts Receivable-Greq GaqneAccounts Receivable-Amber KiskoAccounts Receivable-Shannon PooleAccounts Receivable-Niki SpenceDec. 31 No entryII III II II b. Journalize the transactions under the allowance method, assuming that the allowance account had a beginning balance of $24,450 at the beginning of the year and the company uses the analysis of receivables method. Rustic Tables Company prepared the following aging schedule for its accounts receivable:Aging Class (Numberof Days Past Due)Receivables BalanceEstimated Percent ofon December 31Uncollectible Accounts0-30 days$391,0002 %31-60 days147,000961-90 days46,0003091-120 days17,00050More than 120 days24,00085Total receivables$625,000June 8Allowance for Doubtful AccountsAccounts Receivable-Kathy QuantelAug. 14 CashAllowance for Doubtful AccountsAccounts Receivable-Rosalie OakesOct. 16 Accounts Receivable-Kathy QuantelAllowance for Doubtful AccountsOct. 16 CashAccounts Receivable-Kathy QuantelDec. 31 Allowance for Doubtful AccountsAccounts Receivable-Wade DolanAccounts Receivable-Greg GagneAccounts Receivable-Amber KiskoAccounts Receivable-Shannon PooleAccounts Receivable-Niki SpenceDec. 31 Bad Debt ExpenseAllowance for Doubtful AccountsFeedbackCheck My Warkc. How much higher (lower) would Rustic Tables' net income have been under the direct write-off method than under the allowance method?Higher V by

The allowance for doubtful accounts is created to record estimated bad debt expense for the period.

The following selected transactions were taken from the records of Rustic Tables Company for the year ending December 31: June 8. Wrote off account of Kathy Quantel, $8,150. Aug. 14. Received $5,790 as partial payment on the $14,590 account of Rosalie Oakes. Wrote off the remaining balance as uncollectible. Oct. 16. Received the $8,150 from Kathy Quantel, whose account had been written off on June 8. Reinstated the account and recorded the cas receipt. Dec. 31. Wrote off the following accounts as uncollectible (record as one journal entry): Wade Dolan $2,360 Greg Gagne 1,470 Amber Kisko 5,620 Shannon Poole 3,260 Niki Spence 900 Dec. 31. If necessary, record the year-end adjusting entry for 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.

The following selected transactions were taken from the records of Rustic Tables Company for the year ending December 31: June 8. Wrote off account of Kathy Quantel, $8,150. Aug. 14. Received $5,790 as partial payment on the $14,590 account of Rosalie Oakes. Wrote off the remaining balance as uncollectible. Oct. 16. Received the $8,150 from Kathy Quantel, whose account had been written off on June 8. Reinstated the account and recorded the cas receipt. Dec. 31. Wrote off the following accounts as uncollectible (record as one journal entry): Wade Dolan $2,360 Greg Gagne 1,470 Amber Kisko 5,620 Shannon Poole 3,260 Niki Spence 900 Dec. 31. If necessary, record the year-end adjusting entry for 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.

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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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

The following selected transactions were taken from the records of Rustic Tables Company for the year ending December 31:
June 8. Wrote off account of Kathy Quantel, $8,150.
Aug. 14. Received $5,790 as partial payment on the $14,590 account of Rosalie Oakes. Wrote off the remaining balance as uncollectible.
Oct. 16. Received the $8,150 from Kathy Quantel, whose account had been written off on June 8. Reinstated the account and recorded the cash
receipt.
Dec. 31. Wrote off the following accounts as uncollectible (record as one journal entry):
Wade Dolan
$2,360
Greg Gagne
1,470
Amber Kisko
5,620
Shannon Poole
3,260
Niki Spence
900
Dec. 31.
If necessary, record the year-end adjusting entry for 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.
June 8 Bad Debt Expense
Accounts Receivable-Kathy Quantel
Aug. 14 Cash
Bad Debt Expense
Accounts Receivable-Rosalie Oakes
Oct. 16 Accounts Receivable-Kathy Quantel
Bad Debt Expense
Oct. 16 Cash
Accounts Receivable-Kathy Quantel
Dec. 31 Bad Debt Expense
Accounts Receivable-Wade Dolan
Accounts Receivable-Greq Gaqne
Accounts Receivable-Amber Kisko
Accounts Receivable-Shannon Poole
Accounts Receivable-Niki Spence
Dec. 31 No entry
II III II II

b. Journalize the transactions under the allowance method, assuming that the allowance account had a beginning balance of $24,450 at the beginning of the year and the company uses the analysis of receivables method. Rustic Tables Company prepared the following aging schedule for its accounts receivable:
Aging Class (Number
of Days Past Due)
Receivables Balance
Estimated Percent of
on December 31
Uncollectible Accounts
0-30 days
$391,000
2 %
31-60 days
147,000
9
61-90 days
46,000
30
91-120 days
17,000
50
More than 120 days
24,000
85
Total receivables
$625,000
June 8
Allowance for Doubtful Accounts
Accounts Receivable-Kathy Quantel
Aug. 14 Cash
Allowance for Doubtful Accounts
Accounts Receivable-Rosalie Oakes
Oct. 16 Accounts Receivable-Kathy Quantel
Allowance for Doubtful Accounts
Oct. 16 Cash
Accounts Receivable-Kathy Quantel
Dec. 31 Allowance for Doubtful Accounts
Accounts Receivable-Wade Dolan
Accounts Receivable-Greg Gagne
Accounts Receivable-Amber Kisko
Accounts Receivable-Shannon Poole
Accounts Receivable-Niki Spence
Dec. 31 Bad Debt Expense
Allowance for Doubtful Accounts
Feedback
Check My Wark
c. How much higher (lower) would Rustic Tables' net income have been under the direct write-off method than under the allowance method?
Higher V by

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