Question

Sanders Inc. is a small brick manufacturer that uses the direct write-off method to account for uncollectible accounts. At the end of 2018, its balance for Accounts Receivable is $35,000. The company estimates that of this amount, $4,000 is not likely to be collected in 2019. In 2019, the actual amount of bad debts is $2,900. Record, if necessary, an adjustment for estimated uncollectible accounts at the end of 2018 and the actual bad debts in 2019.

Answer 1

Answer:

no entry at the 2018 year-end. The Company uses direct method

bad debt expense              2,900 debit

        accounts receivable                      2,900 credit

--to record bad debt expense for 2019--

Explanation:

direct write-off method: we only do the adjustment of bad debt once it is determinated as uncollectible.

We do no entry at the end of 2018

on 2019 we recocgnize the bad debt expense and decrease account receivable.