Question

The following selected transactions were taken from the records of Shipway Company for the first year of its operations ending December 31:

Apr. 13.	Wrote off account of Dean Sheppard, $4,040.
May 15.	Received $2,020 as partial payment on the $5,370 account of Dan Pyle. Wrote off the remaining balance as uncollectible.
July 27.	Received $4,040 from Dean Sheppard, whose account had been written off on April 13. Reinstated the account and recorded the cash receipt.
Dec. 31.	Wrote off the following accounts as uncollectible (record as one journal entry):
	Paul Chapman $2,710 Duane DeRosa 2,020 Teresa Galloway 1,210 Ernie Klatt 1,700 Marty Richey 610
31.	If necessary, record the year-end adjusting entry for the uncollectible accounts.

Answer 1

Direct Method
13-Apr	Bad Debt Expense	$4,040
	Accounts Receivable-Dean Sheppard		$4,040
15-May	Cash	$2,020
	Bad Debt Expense	$3,350
	Accounts Receivable-Dan pyle		$5,370
27-Jul	Accounts Receivable-Dean Sheppard	$4,040
	Bad Debt Expense		$4,040
27-Jul	Cash	$4,040
	Accounts Receivable-Dean Sheppard		$4,040
31-Dec	Bad Debt Expense	$8,250
	Accounts Receivable-Paul Chapman		$2,710
	Accounts Receivable-Duane Derosa		$2,020
	Accounts Receivable-Teresa Galloway		$1,210
	Accounts Receivable-Ernie klatt		$1,700
	Accounts Receivable-Marty Richey		$   610

Allowance Method
13-Apr	Allowance for Doubtful Accounts	$ 4,040
	Accounts Receivable-Dean Sheppard		$ 4,040
15-May	Cash	$ 2,020
	Allowance for Doubtful Accounts	$ 3,350
	Accounts Receivable-Dan pyle		$ 5,370
			$        -
27-Jul	Accounts Receivable-Dean Sheppard	$ 4,040	$        -
	Allowance for Doubtful Accounts		$ 4,040
27-Jul	Cash	$ 4,040
	Accounts Receivable-Dean Sheppard		$ 4,040
31-Dec	Allowance for Doubtful Accounts	$ 8,250
	Accounts Receivable-Paul Chapman		$ 2,710
	Accounts Receivable-Duane Derosa		$ 2,020
	Accounts Receivable-Teresa Galloway		$ 1,210
	Accounts Receivable-Ernie klatt		$ 1,700
	Accounts Receivable-Marty Richey		$     610