Make an entry to write off accounts receivable at february

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Problem a) The Fast & Furious Car Rentals starts business on January 1, 2014. At December 31, 2014, the total accounts receivable of the company are $350,000; out of which, management estimates that receivables amounting to $4,500 will turn out to be uncollectible. At February 12, 2015, Astra Ltd who is a receivable of $1,200, becomes bankrupt and nothing can be recovered from them. At December 31, 2015, the accounts receivable show a balance of $475,000. On this date, the company revises the estimates of its credit losses and determines that receivables amounting to $4,800 will become uncollectible receivables.

a. Make an adjusting entry to recognize uncollectible accounts expense at December 31, 2014.

b. Make an entry to write off accounts receivable at February 12, 2015.

c. Make an adjusting entry to recognize uncollectible accounts expense at December 31, 2015.

Problem b) Compare and contrast the allowance and direct write off method for uncollectible receivables

Reference no: EM132676610

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