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What is the difference between direct write-off method and allowance method?
Direct write-off method, a company does not anticipate bad debt expense. The allowance method is preferred over the direct write-off method because the accounts receivable will be presented on the balance sheet with a reduction called the allowance for doubtful accounts.
Jan 1.	At the beginning of the year, AA prepared the Aging of Accounts Receivable Schedule.
	Complete the table.
Customer		Amount	Current	Number of Days Past Due
			(Not Yet Due)	1~30	30~60	60~90
CC		$ 10,000		$ 10,000
DD		1,000	$ 1,000
EE		2,000			$ 2,000
FF		5,000
GG		3,000				$ 3,000
Total		$ 21,000	$ 1,000	$ 10,000	$ 2,000	$ 3,000
Percentage considered uncollectible			2%	5%	10%	15%
Estimated Uncollectible Accounts
Jan 1.	AA had previous balance of Allowance for Doubtful Accounts ($170).
	How much do they have to add to match the estimated uncollectible accounts that you calculated above?
Jan 1.	Please complete the journal entry to add the amount that you calculated above to the allowance for D.A.
Date	Explanation			Debit	Credit
Jan 1.	Post the allowance for doubtful accounts entries in T-account, and show the balance.
	Don't forget the previous balance
		Allowance for Doubtful Account
Mar. 1	Company AA sold rooms to BB on account ($100).
	Journalyze this transaction.
Date	Explanation			Debit	Credit
Mar. 31	Company AA found that the account receivable for BB was uncollectible
	Journalyze this transaction based on allowance method
Date	Explanation			Debit	Credit
April 5.	BB notified that they would pay cash for their debt.
	Journalyze this transaction.
Date	Explanation			Debit	Credit
April 5.	AA received cash and cleared the receivable from BB
	Journalyze this tranxaction.
Date	Explanation			Debit	Credit

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