Show Me How Direct Write-Off Method Journalize the following...

Show Me How Direct Write-Off Method Journalize the following transactions, using the direct write-off method of accounting for uncollectible receivables: Oct. 2: Received $1,140 from Elita Ramirez and wrote off the remainder owed of $2,570 as uncollectible. If an amount box does not require an entry, leave it blank. Oct. 2 Dec. 20: Reinstated the account of Elita Ramirez and received $2,570 cash in full payment. If an amount box does not require an entry, leave it blank. Dec. 20-Reinstate Dec. 20-Collection

Labs

Want to see this concept in action?

NEW

Explore this concept interactively to see how it behaves as you change inputs.

View Labs

Transcript

00:01 Hello students, here is a question.

00:02 Compare and contrast the direct return of method and the allowance method for the bad debts at a minimum.

00:07 Please consider the following of your answer when an expenses are for uncontrolled account receivable recognized under each method.

00:16 So, let us start solving this.

00:18 So, we have to discuss on direct method and allowance method.

00:25 Direct return of method and allowance method.

00:33 So, it is used only when decided a customers will not pay, we do not record any estimated for the use of allowance for doubtful accounts under the direct return of method.

00:49 We record bad debts expenses for the amount we determined will not be paid.

00:53 So, when it comes to an allowance method, in this method we estimate uncollectible account at the end of an year.

01:00 We use this estimated to record a bad debts expenses and set up a reverse account called allowance of doubtful account.

01:07 Also called allowance for uncollectible account.

01:10 Based on the previous experience with the past due account, we can calculate this estimate based on the sales for the year or based on the account receivable balances at the time of estimate.

01:25 So, let us discuss this answer.

01:27 The account of a debtor is written off directly when debtors actually default in the future periods...

Question

Please give Ace some feedback