P8-26A Accounting for uncollectible accounts using the allowance and direct write-off methods, and reporting receivables on the balance sheet [20–30 min] On August 31, 2012, Daisy Floral Supply had a $155,000 debit balance in Accounts receivable and a $6,200 credit balance in Allowance for uncollectible accounts. During September, Daisy made

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P8-26A Accounting for uncollectible accounts using the allowance and
direct write-off methods, and reporting receivables on the balance sheet
[20–30 min]
On August 31, 2012, Daisy Floral Supply had a $155,000 debit balance in Accounts
receivable and a $6,200 credit balance in Allowance for uncollectible accounts.
During September, Daisy made

sales on account, $590,000.
collections on account, $627,000.
write-offs of uncollectible receivables, $7,000.

Requirements
1. Journalize all September entries using the allowance method. Uncollectible
account expense was estimated at 3% of credit sales. Show all September activity
in Accounts receivable, Allowance for uncollectible accounts, and
Uncollectible account expense (post to these T-accounts).

2. Using the same facts, assume instead that Daisy used the direct write-off method
to account for uncollectible receivables. Journalize all September entries using
the direct write-off method. Post to Accounts receivable and Uncollectible
account expense and show their balances at September 30, 2012.
3. What amount of uncollectible account expense would Daisy report on its
September income statement under each of the two methods? Which amount
better matches expense with revenue? Give your reason.
4. What amount of net accounts receivable would Daisy report on its September 30,
2012 balance sheet under each of the two methods? Which amount is more realistic?
Give your reason.