At December 31, 2017, the trial balance of Darby Company contained the following

Question

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

Debit

Credit

923,800

(a)

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?

(Credit account titles are automatically indented when amount is entered. Do not indent manually.)

No

Account Titles

Debit

Credit

Debit

Credit

Accounts Receivable $379,000 Allowance for Doubtful Accounts $ 1,500 Sales Revenue

923,800

Explanation / Answer

Req A: Darby is using ALOWANCE METHOD Req B: JOURNAL ENTRY: Case-1 Bad Debts expense Dr. 9200      Allowance for Uncollectible accounts 9200 Case-2 Bad debts expense Dr. 9238      Allowance for uncllectibles accounts 9238 Req C: JOURNAL ENTRY: Case-1 Bad Debts expense Dr. 12200      Allowance for Uncollectible accounts 12200 Case-2 Bad debts expense Dr. 9238      Allowance for uncllectibles accounts 9238 Req D: Allowance for Uncollectibles Dr. 3400      Accounts receivable 3400 Req E: Bad Debts expense Dr. 3400       Accounts receivable 3400

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