accounting 4,3

The following selected transactions were taken from the records of Shipway Company for the first year of its operations ending December 31.

● April 13: Wrote off account of Dean Sheppard: $8,450 ● May 15: Received $500 as partial payment on the $7,100 account of Dan

Pyle. Wrote off the remaining balance as uncollectible ● July 27: Received $8,450 from Dean Sheppard whose account had been

written off on April 13th. Reinstated the account and recorded the cash receipt.

● December 31: Wrote off the following accounts as uncollectible: ○ Paul Chapman: $2,225 ○ Duane DeRosa: $3,550 ○ Teresa Galloway: $4,770 ○ Ernie Klatt: $1,275 ○ Marty Richey: $1,690

● December 31: If necessary, record the year-end adjusting entry for uncollectible accounts. We also know that ¾% of credit sales are expected to be uncollectible, and sales = $3,778,000

Use these entries to:

1. Journalize entries under the direct write-off method for the Shipway Company. 2. Journalize the entries under the allowance method. Shipway uses the percent

of credit sales method. Based on history ¾% of credit sales are expected to be uncollectible. Shipway recorded $3,778.000 of credit sales during the year

Prepare both journals, one under the direct write-off method and one under the allowance method.

Enhance the format in one of the basic journals you created earlier. Remember to rename and save your file.

When you are ready,, compare and contrast your solutions with the model solutions below.