How are bad debts accounted for under the direct write-off method

How are bad debts accounted for under the direct write-off method

accounting for bad debts

does not need to be in APA or no min word count**

DQ# 1

How are bad debts accounted for under the direct write-off method?  What are the disadvantages of this method?

Why would you select the percentage of sales method for calculating doubtful accounts instead of the percentage of receivables method?  What are disadvantages and advantages of each of these methods of accounting for bad debts?

DQ#2

What are the basic/important issues related to accounting for intangible assets?

Pendergrass Company hires an accounting intern who says that intangible assets should always be amortized over their legal lives. Is the intern correct?  Explain why (or why not).

……………………..Answer preview…………………..

Under the direct write off-method, bad debts are expensed once they are ascertained that they are uncollectible. It is a general accounting technique that is used to account for bad debts once they are determined to be uncollectible. There are corresponding journal entries once bad debts become uncollectible. The bad debts are debited while the accounts receivable account is credited. Under the direct write off method, accountants do not make use of the allowance or reserve account. Although the method is preferred for small businesses, it has disadvantages. It results to the violation of the matching principle under the Generally Accepted Accounting Principles. The violation is due to the expensing of bad debts that are usually related to the previous accounting period…………………………………………………………

APA

428 words

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