Accounting for receivables
Acme Company had a January 1, balance in its Allowance for Doubtful Accounts of $7,000 for the current year. The following transactions and events affected the Allowance for Doubtful Accounts during the current year:
Apr 15 Brad's account receivable of $5,700 was deemed uncollectible.
July 1 Drake paid the full amount of a previously written-off account receivable. This receivable of $2,300 had been written off in the prior year.
Dec 31 Bad debts expense of $7,500 was recorded.
a. What amount should appear in the allowance for doubtful accounts in the December 31, balance sheet for the current year?
b. How are the direct write-off method and the allowance method applied in accounting for uncollectible accounts receivables? Please explain in words.