How much is the provision for uncollectible accounts

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Question - BB Company began operations on January 1, 2019. On December 31, 2019, BB provided for uncollectible accounts based on 5% of annual credit sales. On January 1, 2020, BB changed its method of determining its allowance for uncollectible accounts to the percentage of accounts receivable. The rate of uncollectible accounts was determined to be 15% of the ending accounts receivable balance. In addition, BB wrote off all accounts receivable that were over 1 year old. The following additional information relates to the years ended December 31, 2019 and 2020.

 

2020

2019

Credit sales

P8,000,000

P6,000,000

Collections (including collections on recovery)

6,950,000

4,500,000

Accounts written off

70,000

None

Recovery in accounts previously written off

20,000

None

Required - How much is the provision for uncollectible accounts for the year ended December 31, 2020?

Reference no: EM133148539

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