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, $8,440. Aug. 14. Received $3,000 as partial payment on the $12,500 account of Rosalie Oakes. Wrote off the remaining balance as uncollectible. Oct. 16. Received the $8,440 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 $4,600 3,600 7,150 Greg Gagne Amber Kisko Shannon Poole 2,975 6,630 Niki Spence 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, assuming that the allowance account had a beginning credit balance of $36,000 on January 1 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 on December 31 Estimated Percent of Uncollectible Accounts 0-30 days 31-60 days 61-90 days 91-120 days More than 120 days Total receivables $320,000 110,000 24,000 18,000 43.000 $515,000 1% 10 33 75 (Continued) How much higher (lower) would Rustic Tables' net income have been under C. the direct write-off method than under the allowance method?
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, $8,440. Aug. 14. Received $3,000 as partial payment on the $12,500 account of Rosalie Oakes. Wrote off the remaining balance as uncollectible. Oct. 16. Received the $8,440 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 $4,600 3,600 7,150 Greg Gagne Amber Kisko Shannon Poole 2,975 6,630 Niki Spence 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, assuming that the allowance account had a beginning credit balance of $36,000 on January 1 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 on December 31 Estimated Percent of Uncollectible Accounts 0-30 days 31-60 days 61-90 days 91-120 days More than 120 days Total receivables $320,000 110,000 24,000 18,000 43.000 $515,000 1% 10 33 75 (Continued) How much higher (lower) would Rustic Tables' net income have been under C. the direct write-off method than under the allowance method?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text: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, $8,440.
Aug. 14. Received $3,000 as partial payment on the $12,500 account of Rosalie Oakes.
Wrote off the remaining balance as uncollectible.
Oct. 16. Received the $8,440 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
$4,600
3,600
7,150
Greg Gagne
Amber Kisko
Shannon Poole
2,975
6,630
Niki Spence
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, assuming that the allowance
account had a beginning credit balance of $36,000 on January 1 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
on December 31
Estimated Percent of
Uncollectible Accounts
0-30 days
31-60 days
61-90 days
91-120 days
More than 120 days
Total receivables
$320,000
110,000
24,000
18,000
43.000
$515,000
1%
10
33
75
(Continued)
Transcribed Image Text:How much higher (lower) would Rustic Tables' net income have been under
C.
the direct write-off method than under the allowance method?
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