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Uncollectible Account Receivable - Allowance Method

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Explain Direct write off method and Allowance method of estimating bad debts expense.
Give general journal entries for the following transactions separately for (Direct write off (2) Allowance method (Percentage of sales and (3) Allowance method (Percentage of accounts receivable.

1 during year 1 a corporation made credit sales of \$100,000 and made collections of \$60,000; during year 2 the corporation made credit sales of \$ 80000, made collections of \$36500 from year 1 credit sales and \$60000 from year 2 credit sales, and wrote-off credit sales from year 1in the amount of \$3,500.Give general journal entries for year 1 and 2 assuming Direct write off method of uncollectible account receivable.

2 ) During year 1 a corporation made credit sales of \$100,000 and made collections of \$45,000; during year 2 the corporation made credit sales of \$150,000, made collections of \$20000 from year 1 credit sales and \$100000 from
year 2 credit sales, and wrote-off credit sales from year 1 in the amount of \$600; the percentage-of-sales method was used to estimate bad debt expense; bad debt expense was estimated to be 1% of credit sales each year

Year 1 During year 1 a corporation made credit sales of \$300,000 and made collections of \$200,000.
Year 2 the corporation made credit sales of \$400,000 and made collections 0f \$50000 from year 1 credit sales and \$250000 from year 2 credit sales,
It wrote-off actual bad debts losses of \$3500 from year 1 credit sales.
the allowance for uncollectible accounts was estimated to be 3% of uncollected accounts receivable each year.

3 Year 1 During year 1 a corporation made credit sales of \$300,000 and made collections of \$200,000.
Year 2 the corporation made credit sales of \$400,000 and made collections 0f \$50000 from year 1 credit sales and \$250000 from year 2 credit sales,
It wrote-off actual bad debts losses of \$3500 from year 1 credit sales.
the allowance for uncollectible accounts was estimated to be 3% of uncollected accounts receivable each year.

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Accounting for uncollectible accounts using the allowance method

Accounting for uncollectible accounts using the allowance method, and reporting receivables on the balance sheet

At September 30, 2012, the accounts of Mountain Terrace Medical Center (MTMC) include the following:

Accounts receivable \$145,000
Allowance for uncollectible accounts (credit balance) 3,500

During the last quarter of 2012, MTMC completed the following selected transactions:
Dec 28
Wrote off accounts receivable as uncollectible: Regan, Co., \$1,300; Owen Mac, \$900; and Rain, Inc., \$700.
Dec 31
Recorded uncollectible account expense based on the aging of accounts receivable, as follows:

AGE OF ACCOUNTS
Accounts Receivable 1-30 days 31-60 days 61-90 days over 90 days
\$165,000 \$97,000 \$37,000 \$14,000 \$17,000
Est. % uncollectible .03% 3% 30% 35%

Requirements
1. Journalize the transactions.
2. Open the Allowance for uncollectible accounts T-account, and post entries affecting that account. Keep a running balance.
3. Show how Mountain Terrace Medical Center should report net accounts receivable on its December 31, 2012 balance sheet. Use the three line reporting format.

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