Reference no: EM132832821
ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS/ BAD DEBT
On 1/1/2016, Penman Co. had the following account balances in its financial records:
Accounts receivable: $122,000
Allowance for uncollectible accounts: $7,900
During 2016, its sales on credit were $1,173,000 and (cash) collections on credit sales were $1,150,000. The following additional transactions occurred during the year:
Feb. 17: Wrote off Nissim's account, $3,600
May 28: Wrote off White's account, $2,400
Dec. 16: Wrote off Ohlson's account, $900
Dec. 30: Recorded the provision for uncollectible accounts at 0.8% of credit sales for the year. (Hint: The allowance account is increased by 0.8% of credit sales regardless of any prior write-offs)
Problem 1: Compute and show how accounts receivable and the allowance for uncollectible accounts are reported in its balance sheet on December 31, 2016.