ACC 205 Week 2 Exercise 6 Direct write-off method

6. Direct write-off method.Harrisburg Company, which began business in early 20X7, reported $40,000 of

accounts receivable on the December 31, 20X7, balance sheet. Included in this amount was $550 for a

sale made to Tom Mattingly in July. On January 4, 20X8, the company learned that Mattingly had filed

for personal bankruptcy. Harrisburg uses the direct write-off method to account for uncollectibles.

a. Prepare the journal entry needed to write off Mattingly’s account.

b. Comment on the ability of the direct write-off method to value receivables on the year-end balance

sheet.