Direct Write-off Method: Under this method, actual losses from uncollectible accounts are charged to Bad-Debt expense. This method contravenes the matching rule because Bad Debts are often recorded in the periods subsequent to sale. Therefore, this method can impact the Income Statement and Balance Sheet of an organization and is thereby, suggested to be used only when the Bad Debt losses are insignificant. Allowance Method: This Method creates an allowance for doubtful debts at the end of each period by means of an adjustment entry. It is further categorized into two methods: 1. Percentage of Sales Method. 2. Aging of Receivables method. Allowance method complies with the matching rule as expense relating to a particular period is charged against revenues of that particular period. Also, under this method, receivables are recorded at their Net Realizable Value at the end of each period. Therefore, this method should be used for Financial Reporting purposes when the Bad Debt losses are material. To Indicate: The journal entries as per Direct Write-off Method and Allowance Method in the books of Lima Company

Question

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Answer 1

Question

Chapter 9, Problem E9.21E

To determine

Direct Write-off Method: Under this method, actual losses from uncollectible accounts are charged to Bad-Debt expense. This method contravenes the matching rule because Bad Debts are often recorded in the periods subsequent to sale. Therefore, this method can impact the Income Statement and Balance Sheet of an organization and is thereby, suggested to be used only when the Bad Debt losses are insignificant.

Allowance Method: This Method creates an allowance for doubtful debts at the end of each period by means of an adjustment entry. It is further categorized into two methods:

1. Percentage of Sales Method.

2. Aging of Receivables method.

Allowance method complies with the matching rule as expense relating to a particular period is charged against revenues of that particular period. Also, under this method, receivables are recorded at their Net Realizable Value at the end of each period. Therefore, this method should be used for Financial Reporting purposes when the Bad Debt losses are material.

To Indicate:

The journal entries as per Direct Write-off Method and Allowance Method in the books of Lima Company

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On January 1, 2015, Accounts Receivable was $37,000. Sales on account for 2015 totaled $196,000. The ending balance of Accounts Receivable was $66,000. What is the amount of cash collected from customers?

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Answer 2

Question

Chapter 9, Problem E9.21E

To determine

Direct Write-off Method: Under this method, actual losses from uncollectible accounts are charged to Bad-Debt expense. This method contravenes the matching rule because Bad Debts are often recorded in the periods subsequent to sale. Therefore, this method can impact the Income Statement and Balance Sheet of an organization and is thereby, suggested to be used only when the Bad Debt losses are insignificant.

Allowance Method: This Method creates an allowance for doubtful debts at the end of each period by means of an adjustment entry. It is further categorized into two methods:

1. Percentage of Sales Method.

2. Aging of Receivables method.

Allowance method complies with the matching rule as expense relating to a particular period is charged against revenues of that particular period. Also, under this method, receivables are recorded at their Net Realizable Value at the end of each period. Therefore, this method should be used for Financial Reporting purposes when the Bad Debt losses are material.

To Indicate:

The journal entries as per Direct Write-off Method and Allowance Method in the books of Lima Company

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Answer 3

Question

Chapter 9, Problem E9.21E

To determine

Direct Write-off Method: Under this method, actual losses from uncollectible accounts are charged to Bad-Debt expense. This method contravenes the matching rule because Bad Debts are often recorded in the periods subsequent to sale. Therefore, this method can impact the Income Statement and Balance Sheet of an organization and is thereby, suggested to be used only when the Bad Debt losses are insignificant.

Allowance Method: This Method creates an allowance for doubtful debts at the end of each period by means of an adjustment entry. It is further categorized into two methods:

1. Percentage of Sales Method.

2. Aging of Receivables method.

Allowance method complies with the matching rule as expense relating to a particular period is charged against revenues of that particular period. Also, under this method, receivables are recorded at their Net Realizable Value at the end of each period. Therefore, this method should be used for Financial Reporting purposes when the Bad Debt losses are material.

To Indicate:

The journal entries as per Direct Write-off Method and Allowance Method in the books of Lima Company

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Answer 4

Question

Chapter 9, Problem E9.21E

To determine

Direct Write-off Method: Under this method, actual losses from uncollectible accounts are charged to Bad-Debt expense. This method contravenes the matching rule because Bad Debts are often recorded in the periods subsequent to sale. Therefore, this method can impact the Income Statement and Balance Sheet of an organization and is thereby, suggested to be used only when the Bad Debt losses are insignificant.

Allowance Method: This Method creates an allowance for doubtful debts at the end of each period by means of an adjustment entry. It is further categorized into two methods:

1. Percentage of Sales Method.

2. Aging of Receivables method.

Allowance method complies with the matching rule as expense relating to a particular period is charged against revenues of that particular period. Also, under this method, receivables are recorded at their Net Realizable Value at the end of each period. Therefore, this method should be used for Financial Reporting purposes when the Bad Debt losses are material.

To Indicate:

The journal entries as per Direct Write-off Method and Allowance Method in the books of Lima Company

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Answer 5

Chapter 9, Problem E9.21E

To determine

Direct Write-off Method: Under this method, actual losses from uncollectible accounts are charged to Bad-Debt expense. This method contravenes the matching rule because Bad Debts are often recorded in the periods subsequent to sale. Therefore, this method can impact the Income Statement and Balance Sheet of an organization and is thereby, suggested to be used only when the Bad Debt losses are insignificant.

Allowance Method: This Method creates an allowance for doubtful debts at the end of each period by means of an adjustment entry. It is further categorized into two methods:

1. Percentage of Sales Method.

2. Aging of Receivables method.

Allowance method complies with the matching rule as expense relating to a particular period is charged against revenues of that particular period. Also, under this method, receivables are recorded at their Net Realizable Value at the end of each period. Therefore, this method should be used for Financial Reporting purposes when the Bad Debt losses are material.

To Indicate:

The journal entries as per Direct Write-off Method and Allowance Method in the books of Lima Company

Answer 6

Chapter 9, Problem E9.21E

To determine

Direct Write-off Method: Under this method, actual losses from uncollectible accounts are charged to Bad-Debt expense. This method contravenes the matching rule because Bad Debts are often recorded in the periods subsequent to sale. Therefore, this method can impact the Income Statement and Balance Sheet of an organization and is thereby, suggested to be used only when the Bad Debt losses are insignificant.

Allowance Method: This Method creates an allowance for doubtful debts at the end of each period by means of an adjustment entry. It is further categorized into two methods:

1. Percentage of Sales Method.

2. Aging of Receivables method.

Allowance method complies with the matching rule as expense relating to a particular period is charged against revenues of that particular period. Also, under this method, receivables are recorded at their Net Realizable Value at the end of each period. Therefore, this method should be used for Financial Reporting purposes when the Bad Debt losses are material.

To Indicate:

The journal entries as per Direct Write-off Method and Allowance Method in the books of Lima Company

Answer 7

Chapter 9, Problem E9.21E

To determine

Direct Write-off Method: Under this method, actual losses from uncollectible accounts are charged to Bad-Debt expense. This method contravenes the matching rule because Bad Debts are often recorded in the periods subsequent to sale. Therefore, this method can impact the Income Statement and Balance Sheet of an organization and is thereby, suggested to be used only when the Bad Debt losses are insignificant.

Allowance Method: This Method creates an allowance for doubtful debts at the end of each period by means of an adjustment entry. It is further categorized into two methods:

1. Percentage of Sales Method.

2. Aging of Receivables method.

Allowance method complies with the matching rule as expense relating to a particular period is charged against revenues of that particular period. Also, under this method, receivables are recorded at their Net Realizable Value at the end of each period. Therefore, this method should be used for Financial Reporting purposes when the Bad Debt losses are material.

To Indicate:

The journal entries as per Direct Write-off Method and Allowance Method in the books of Lima Company

Answer 8

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Answer 9

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Answer 10

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Answer 11

Ch. 9 - 1. With good internal controls, the person who...Ch. 9 - Which of the following is a limitation of the...Ch. 9 - 3. The entry to record a write-off of an...Ch. 9 - Brickman Company uses the allowance method to...Ch. 9 - Brickman’s ending balance of accounts Receivable...Ch. 9 - During the year, Bernard Company had net credit...Ch. 9 - At December 31 year-end, Crain Company has an...Ch. 9 - Using the data in the preceding question, what...Ch. 9 - At year-end, Schultz Company has cash of $11,600,...Ch. 9 - Using the data in the preceding question, assume...

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