Morry Company Wrote Off the Following Accounts Receivable as Uncollectible

question 30

Essay

Morry Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31: Required:
(a)Journalize the write-offs for the current year under the direct write-off method.(b)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.(c)How much higher or lower would Morry Company's net income have been under the direct write-off method than under the allowance method?

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Definitions:

Accounts Payable

An accounting entry that represents a company's obligation to pay off a short-term debt to its creditors or suppliers.

Set Up Users

The process of creating accounts or profiles for individuals to allow them access to use a system, software, or service.

Preferences

User-selected settings or choices within a software or system that customize its use or appearance.

Owner's Equity

The residual interest in the assets of a business after deducting liabilities, representing the owner's claim on the company's resources.