At the beginning of Year 1, a company has a balance of $24,800 in accounts receivable. Because the company is a privately owned company, the company has used only the direct write-off method to account for uncollectible accounts. However, at the end of Year 1, the company wishes to obtain a loan at the local bank, which requires the preparation of proper financial statements. This means that the company now will need to use the allowance method. The following transactions occur during Year 1 and Year 2. 1. During Year 1, install air conditioning systems on account, $178,000. 2. During Year 1, collect $173,000 from customers on account. 3. At the end of Year 1, estimate that uncollectible accounts total 20% of ending accounts receivable. 4. In Year 2, customers' accounts totaling $6,800 are written off as uncollectible. Record each transaction using the direct write-off method. (If no entry is required for a particular transaction/event, select "No ournal Entry Required" in the first account field.)

At the beginning of Year 1, a company has a balance of $24,800 in accounts receivable. Because the company is a privately owned company, the company has used only the direct write-off method to account for uncollectible accounts. However, at the end of Year 1, the company wishes to obtain a loan at the local bank, which requires the preparation of proper financial statements. This means that the company now will need to use the allowance method. The following transactions occur during Year 1 and Year 2. 1. During Year 1, install air conditioning systems on account, $178,000. 2. During Year 1, collect $173,000 from customers on account. 3. At the end of Year 1, estimate that uncollectible accounts total 20% of ending accounts receivable. 4. In Year 2, customers' accounts totaling $6,800 are written off as uncollectible. Record each transaction using the direct write-off method. (If no entry is required for a particular transaction/event, select "No ournal Entry Required" in the first account field.)

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 26Q: A customer was unable to pay the accounts receivable on time in the amount of $34,000. The customer...

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