Problem 95A Debits Credits Based on the information given wh

Problem 9-5A

Debits

Credits

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?

Allowance method

OR

Direct Write-off Method ?

Repeat part (d) assuming that Darby uses the direct write-off method instead of the allowance method in accounting for uncollectible accounts receivable.

Solution

Req a: Allowance method is followed. Req b: Journal entries: No. Accounts title and explanations Debit $ Credit $ 31-Dec Bad debts expense Account Dr. 9300    Allowance for Doubtful accounts 9300 Bad debts expense Account Dr. (982600*1%) 9826    Allowance for Doubtful accounts 9826 Req c: No. Accounts title and explanations Debit $ Credit $ 31-Dec Bad debts expense Account Dr. 11500    Allowance for Doubtful accounts 11500 Bad debts expense Account Dr. (982600*1%) 9826    Allowance for Doubtful accounts 9826 Req d: No. Accounts title and explanations Debit $ Credit $ Jan-18 Allowance for doubtful account Dr. 2800      Accounts receivable 2800 Req e: No. Accounts title and explanations Debit $ Credit $ Jan-18 Bad debts expense Account Dr. 2800      Accounts receivable 2800