Sheena Stone is an attorney in Los Angeles. Stone uses the direct write-off meth

Question

Sheena Stone is an attorney in Los Angeles. Stone uses the direct write-off method to account for uncollectible receivables. At November 30, 2010, Stone’s accounts receivable totaled $21,000. During December, she earned revenue of $24,000 on account and collected $23,000 on account. She also wrote off uncollectible receivables of $1,440 on December 31, 2010. Requirements R1. Use the direct write-off method to journalize Stone’s write-off of the uncollectible receivables. R2. What is Stone’s balance of Accounts receivable at December 31, 2010? Does Stone expect to collect the total amount?

Explanation / Answer

R1 Journal Entry for write off uncollectible receivables

Dec 31, 2010

Revenue Debit $ 1440

Accounts receivables Credit $ 1440

R2 balance in Accounts receivables = $ 21000+$24000-$23000-$1440

= $20560

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