Answer
a.The direct write-of methodology does not ensure that expenses and revenues are matched to their respective periods. Second, the methodology does not report the net realizable values of receivables. Consequently, the method is only ideal in situations dealing with inconsequential, uncollectible amounts.
b. The allowance method is utilized at the conclusion of every period to make estimations for accounts that are uncollectible. The method aids in arriving at the net realizable value of the uncollectible accounts. Expected collectability is determined by assessing current and past trends relating to the accounts receivable.
c. First, Simms should reverse the accounts that were written off by debiting the respective accounts receivable with the amount and crediting the allowance for doubtful accounts that had been written off. Secondly, the amount that is collected from the previously written-off account is debited in the cash account and credited to the respective accounts receivable account.
Work Step by Step
a.The direct write-of methodology does not ensure that expenses and revenues are matched to their respective periods. Second, the methodology does not report the net realizable values of receivables. Consequently, the method is only ideal in situations dealing with inconsequential, uncollectible amounts.
b. The allowance method is utilized at the conclusion of every period to make estimations for accounts that are uncollectible. The method aids in arriving at the net realizable value of the uncollectible accounts. Expected collectability is determined by assessing current and past trends relating to the accounts receivable.
c. First, Simms should reverse the accounts that were written off by debiting the respective accounts receivable with the amount and crediting the allowance for doubtful accounts that had been written off. Secondly, the amount that is collected from the previously written-off account is debited in the cash account and credited to the respective accounts receivable account.
