Morry Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31:
Required: (a) Journalize the write-offs for the current year under the direct write-off method.
(b) Journalize the write-offs for the current year under the allowance method. Also, joumalize the adjusting entry for uncollectible receivables assuming the company made $\$ 2,400,000$ of credit sales during the year and the industry average for uncollectible receivables is $1.50 \%$ of credit sales.
(c) How much higher or lower would Morry Company's net income have been under the direct write-off method than under the allowance method?

Question

Morry Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31:
​  Required: (a) Journalize the write-offs for the current year under the direct write-off method.
(b) Journalize the write-offs for the current year under the allowance method. Also, joumalize the adjusting entry for uncollectible receivables assuming the company made $\$ 2,400,000$ of credit sales during the year and the industry average for uncollectible receivables is $1.50 \%$ of credit sales.
(c) How much higher or lower would Morry Company's net income have been under the direct write-off method than under the allowance method?

Quizplus · Accepted Answer

The Answer of Morry Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31:
​  Required: (a) Journalize the write-offs for the current year under the direct write-off method.
(b) Journalize the write-offs for the current year under the allowance method. Also, joumalize the adjusting entry for uncollectible receivables assuming the company made $\$ 2,400,000$ of credit sales during the year and the industry average for uncollectible receivables is $1.50 \%$ of credit sales.
(c) How much higher or lower would Morry Company's net income have been under the direct write-off method than under the allowance method?

Morry Company Wrote Off the Following Accounts Receivable as Uncollectible $2,400,000\$ 2,400,000$2,400,000

Morry Company Wrote Off the Following Accounts Receivable as Uncollectible $\$ 2,400,000$