Reference no: EM13823396
Analyzing and Reporting Receivable Transactions and Uncollectible Accounts (Using Percentage-of-Sales Method)
At the beginning of 2014, Penman Company had the following (normal) account balances in its financial records:
Accounts Receivable $122,000
Allowance for Uncollectible Accounts 7,900
During 2014, its credit sales were $1,173,000 and 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 Weiss’s account, $2,400.
Dec.15 Wrote off Ohlson’s account, $900.
Dec.31 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.)
Compute and show how accounts receivable and the allowance for uncollectible accounts are reported in its December 31, 2014, balance sheet.
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