Accounting 26th Edition by Carl Warren,James Reeve,Jonathan Duchac

Exercise 55

Entries for bad debt expense under the direct write-off and allowance methods
The following selected transactions were taken from the records of Rustic Tables Company for the year ending December 31:



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:

c. How much higher (lower) would Rustic Tables' net income have been under the direct write-off method than under the allowance method