Chapter 9, Problem E9.16E

Journalizing transactions using the direct write-off method

On June 1, High Performance Cell Phones sold $19,000 of merchandise to Andrew

Tracking Company on account. Andrew fell on hard times and on July 15 paid only $7,000 of the account receivable. Alter repeated attempts to collect, High Performance finally wrote off its accounts receivable from Andrew on September 5. Six months letter, March 5, High Performance received Andrew's check for $12,000 with a note apologizing for the late payment.

Requirements

1. Journalize the transactions for High Performance Cell Phones using the direct write-off method. Ignore Cost of Goods Sold.
2. What are some limitations that High Performance will encounter when using the direct write-off method?

Use the fallowing information to answer Exercises E9-17 and E9-18.

At January 1, 2016, Hilly Mountain Flagpoles had Accounts Receivable of $31,000, and Allowance for Bad Debts had a credit balance of $3,000. During the year, Hilly Mountain Flagpoles recorded the following:

1. Sales of $174,000 ($157,000 on account; $17,000 for cash). Ignore Cost of Goods Sold.
2. Collections on account, $131,000.
3. Write-offs of uncollectible receivables, $2,200.