Question

Applying the direct write-off method to account for uncollectibles Shawna Valley is an attorney in Los Angeles. Valley uses the direct write-off method to account for uncollectible receivables. At April 30, 2018, Valley’s accounts receivable totaled $19,000. During May, she earned revenue of $22,000 on account and collected $15,000 on account. She also wrote off uncollectible receivables of $1,100 on May 31, 2018.

Answer 1

Answer:

The question is:

a. Journalize Valley's written off of the uncollectible receivables

b. What is the Account Receivables of Valley at May 31st 2018.

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The answer is:

a.

31 May 2018

Dr Bad Debt expenses               1,100

Cr Account Receivables            1,100

( to written off of the uncollectible receivables)

b.

The balance of Account Receivables as at 31 May 2018: $24,900

Explanation:

a. Because direct written-off method is applied, the uncollectible amount is only recorded when it incurred rather than when it is foreseen. Bad debt expenses is debited and an offsetting credit is recorded straight into Account Receivables account ( instead of Provision for Uncollectible account).

b. The balance at end of May is calculated as:

Ending balance of April + Credit sales in May - Collection of credit sales in May - Uncollectibale amount recorded in May = 19,000 + 22,000 - 15,000 - 1,100 = $24,900.