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

question 91

Essay

Welles Company uses the direct write-off method of accounting for uncollectible accounts receivable.On December 6,2015,Welles sold $6,300 of merchandise to the Fleming Company.On August 8,2016,after numerous attempts to collect the account,Welles determined that the $6,300 account of the Fleming Company was uncollectible.
Required:
Part a.Prepare the general journal entries required to record the transactions on August 8,2016.
Part 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:

Organizational Systems

The structured arrangement of parts, people, and processes within an organization that work together to achieve its goals.

Inputs

Resources, information, or effort that is put into a system or process to achieve an output or a result.

Technology Component

Elements or parts of a technological system, such as hardware, software, and network resources, that are essential for its functioning.

Throughputs

The amount of material or items passing through a system or process within a given period.