4. %.00 points On December 31, January 2,2015, the company leams that authorizes
ID: 2566520 • Letter: 4
Question
4. %.00 points On December 31, January 2,2015, the company leams that authorizes a a write-off of these accounts totaling $12,000. Extreme Fitness uses the direct writo-off mothod What amount would the company report as its receivable accounts on December 31,2014? a b. Prepare the journal entry to write of the accounts on January 2, 2015. (f no entry i required for a transaction/event, select "No Journal Entry Required" in the first account field.) ournal entry worksheet totaling $12,000. 02, 201 MacBook AirExplanation / Answer
A. Under the Direct write off method the bad debt is recognized only when a specific account is determined uncollectible
As the management authorized a writeoff on January 2, 2015 the Accounts receivable on December 31, 2014 would remain at 820,000
Accounts receivable - 820,000
B. Journal entry for write off on January 2, 2015
C-1 Accounts receivable on January 3, 2015 = Accounts Receivable - Bad debts
= 820,000 - 12,000 = 808,000
Accounts Receivable = 808,000
C-2 The Accounts Receivable balance has changed from December 31, 2014 to January 3, 2015
Yes.
January 02, 2015 Bad debt 12,000 Accounts Receivable 12,000