Owens Company Uses the Direct Write-Off Method of Accounting for Uncollectible

question 198

Essay

Owens Company uses the direct write-off method of accounting for uncollectible accounts receivable. On December 6, Year 1, Owens sold $6,300 of merchandise to the Valley Company. On August 8, Year 2, after numerous attempts to collect the account, Owens determined that the account of the Valley Company was uncollectible.
a. Prepare the journal entry required to record the transactions on August 8.
b. Assuming that the $6,300 is material, explain how the direct write-off method violates the matching principle in this case.

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Definitions:

Orbicularis Oris

A circular muscle surrounding the mouth, involved in controlling movements of the mouth and lips.

Levator Palpebrae Superioris

A muscle in the eyelid responsible for raising the upper eyelid.

Eyelids

Skin-covered folds that can open and close to protect the eye from debris and control light entry.

Indirect Approach

A communication method where the main point or request is subtly introduced, often after providing background information or context.