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

question 142

Essay

Welles Company uses the direct write-off method of accounting for uncollectible accounts receivable.On December 6,2013,Welles sold $6,300 of merchandise to the Fleming Company.On August 8,2014,after numerous attempts to collect the account,Welles determined that the $6,300 account of the Fleming Company was uncollectible.
a.Prepare the general journal entries required to record the transactions on August 8,2014.
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:

Outbound Transportation

involves the movement of finished goods from the warehouse to the end customer, an essential part of the distribution process.

Utilization of Resources

Refers to the efficient and effective use of resources such as time, money, and materials within an organization or project.

Cost Reduction

Strategies or actions taken to lower expenses and increase efficiency in business operations.

Cross-functional Teams

Teams composed of members from different departments or functional areas within an organization, working together towards a common goal.