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

question 72

Essay

Welles Company uses the direct write-off method of accounting for uncollectible accounts receivable.On December 6,2010,Welles sold $6,300 of merchandise to the Fleming Company.On August 8,2011,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 8,2011
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:

Differentiated Products

Goods that are distinguished from similar products based on quality, features, and branding to create perceived differences appealing to diverse consumer segments.

Standardized Products

Products that are uniform in quality and specifications across producers and can be interchangeably used, often traded on futures exchanges.

Differentiated Products

Products that are distinguished from similar products by unique characteristics, such as quality, brand, or features.

Oligopoly

A market structure characterized by a small number of large firms that dominate the market, leading to limited competition and potentially higher prices for consumers.