Question

Applying the direct write-off method to account for uncollectibles

Shawna Valley is an attorney in Los Angeles. Valley uses the direct write-off method to account for uncollectible receivables.

At April 30, 2018, Valley’s accounts receivable totaled $19,000. During May, she earned revenue of $22,000 on account and collected $15,000 on account. She also wrote off uncollectible receivables of $1,100 on May 31, 2018.

Requirements

1. Use the direct write-off method to journalize Valley’s write-off of the uncollectible receivables.

2. What is Valley’s balance of Accounts Receivable at May 31, 2018?

Answer 1

Answer: Please see below for no1

2)Valley’s balance of Accounts Receivable at May 31, 2018= $24,900

Step-by-step explanation:

1. journal to record Valley’s write-off of the uncollectible receivables using the direct write-off method

The direct write off method is a method to account for bad debt that cannot be recovered from clients Here, the Bad Debts Expense account is debited while Accounts Receivable is credited.

Date Account Debit Credit

May 31 2018 Bad debt expense $1,100

Accounts receivable $1,100

2.Valley’s balance of Accounts Receivable at May 31, 2018

Accounts and explanation Amount

Beginning balance on Accounts receivable $19,000

Earned revenue on Account +$22,000

Total amounts receivable $41,000

collected from clients -$15,000

Amount written off -$1, 100

Ending Balance of Account Receivable $24,900

at May 31st 2018