Morry Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31:
Required: 1) Journalize the write-offs for the current year under the direct write-off method.
2) Journalize the write-offs for the current year under the allowance method. Also, journalize the adjusting entry for uncollectible receivables assuming the company made $2,400,000 of credit sales during the year and the industry average for uncollectible receivables is 1.50% of credit sales.
3) How much higher or lower would Morry Company's net income have been under the direct write-off method than under the allowance method?

Question

Morry Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31:
Required:  1) Journalize the write-offs for the current year under the direct write-off method.
2) Journalize the write-offs for the current year under the allowance method. Also, journalize the adjusting entry for uncollectible receivables assuming the company made $2,400,000 of credit sales during the year and the industry average for uncollectible receivables is 1.50% of credit sales.
3) How much higher or lower would Morry Company's net income have been under the direct write-off method than under the allowance method?

Quizplus · Accepted Answer

The Answer of Morry Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31:
Required:  1) Journalize the write-offs for the current year under the direct write-off method.
2) Journalize the write-offs for the current year under the allowance method. Also, journalize the adjusting entry for uncollectible receivables assuming the company made $2,400,000 of credit sales during the year and the industry average for uncollectible receivables is 1.50% of credit sales.
3) How much higher or lower would Morry Company's net income have been under the direct write-off method than under the allowance method?

Morry Company Wrote Off the Following Accounts Receivable as Uncollectible