The following data were associated with the accounts receivable and uncollectible accounts of Julia Jay, Inc., during 2012:
a. The opening credit balance in Allowance for Bad Debts was $600,000 at January 1, 2012.
b. During 2012, the company realized that specific accounts receivable totaling $630,000 had gone bad and had been written off.
c. An account receivable of $35,000 was collected during 2012. This account had previously been written off as a bad debt in 2011.
d. The company decided that Allowance for Bad Debts would be $650,000 at the end of 2012.
1. Prepare journal entries to show how these events would be recognized in the accounting system using the allowance method.
2. Discuss the advantages of the allowance method when compared to the direct method with respect to the matching principle.
