Problem 9-5A Debits Credits No Account Titles Debit Credit Problem 9-5A At Decem

Question

Problem 9-5A

Debits

Credits

No

Account Titles

Debit

Credit

Problem 9-5A

At December 31, 2017, the trial balance of Darby Company contained the following amounts before adjustment.

Debits

Credits

Accounts Receivable $385,000 Allowance for Doubtful Accounts $ 1,000 Sales Revenue 970,000 Based on the information given, which method of accounting for bad debts is Darby Company using—the direct write-off method or the allowance method?
Direct write-off methodAllowance method (b) Prepare the adjusting entry at December 31, 2017, for bad debt expense under each of the following independent assumptions. (1) An aging schedule indicates that $11,750 of accounts receivable will be uncollectible. (2) The company estimates that 1% of sales will be uncollectible. (c) Repeat part (b) assuming that instead of a credit balance there is an $1,000 debit balance in Allowance for Doubtful Accounts. (d) During the next month, January 2018, a $3,000 account receivable is written off as uncollectible. Prepare the journal entry to record the write-off. (e) Repeat part (d) assuming that Darby uses the direct write-off method instead of the allowance method in accounting for uncollectible accounts receivable.
(Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No

Account Titles

Debit

Credit

(b) (1) Dec. 31

(2) Dec. 31

(c) (1) Dec. 31

(2) Dec. 31

(d)

(e)

Explanation / Answer

Problem 9-5A Allowence Method No Account Titles Debit Credit (b) (1) Dec. 31 Bad Debt Expenses 10750 Allowance for Doubtful Accounts 10750 (2) Dec. 31 Bad Debt Expenses 8700 Allowance for Doubtful Accounts 8700 (c) (1) Dec. 31 Bad Debt Expenses 12750 Allowance for Doubtful Accounts 12750 (2) Dec. 31 Bad Debt Expenses 10700 Allowance for Doubtful Accounts 10700 (d) Allowance for Doubtful Accounts 3000 Accounts Receivable 3000 (e) Bad Debt Expenses 3000 Accounts Receivable 3000

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