Chapter 7, Problem 8DQ

To determine

Accounts receivable: It refers to the amount that is to be received by a company for providing goods and services on credit. It is an asset account.

Allowance method for accounts receivable: This is a method of accounting for writing off bad debts expense by debiting the allowance for doubtful accounts and crediting the accounts receivable account which results no change in the income statement as both accounts come under balance sheet.

Write off method for accounts receivable: This is a method of accounting for writing off bad debts expense by directly writing them off from sales revenue for the period for which they are uncollectible. It has impact on both the income statement and as well as the balance sheet as it reduces the amount of accounts receivable.

To identify: The company used the direct write off method or allowance method in accounting for its accounts receivable and the realizable value of its receivable balance as of December 31, 2015.