164.The Branson Company uses the percent of sales method of accounting for uncollectible accounts receivable. During the current year, the following transactions occurred:
Mar. 7Branson Company determined that the $2,000 account receivable of the Bing Company was uncollectible, and wrote it off.
Jun. 9Bing Company paid $1,500 of the amount owed to the Branson
Company. Branson Company does not expect further collections from the Bing Company.
Dec. 31Branson Company estimates that 1.5% of its $900,000 of credit
sales will be uncollectible.
Prepare the general journal entries to record these transactions.
165.Thatcher Company had a January 1, credit balance in its Allowance for Doubtful Accounts of $4,000 for the current year. The following transactions and events affected the Allowance for Doubtful Accounts during the current year:
Apr. 15Bean's account receivable of $2,700 was deemed uncollectible.
July 1Cho paid the full amount of a previously written-off account receivable. This receivable of $1,300 had been written off in the prior year.
Dec. 31Bad debts expense of $4,500 was recorded.
What amount should appear in the allowance for doubtful accounts in the December 31, balance sheet for the current year?
166.Owens Company uses the direct write-off method of accounting for uncollectible accounts receivable. On December 6, Year 1, Owens sold $6,300 of merchandise to the Valley Company. On August 8, Year 2, after numerous attempts to collect the account, Owens determined that the account of the Valley Company was uncollectible.
a. Prepare the journal entry required to record the transactions on August 8.
b. Assuming that the $6,300 is material, explain how the direct write-off method violates the matching principle in this case.