Analyzing and Reporting Receivable Transactions andUncollectible Accounts Using Percentage- of-Sales Method toEstimate Bad Debt...Analyzing...

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Analyzing and Reporting Receivable Transactions andUncollectible Accounts Using Percentage- of-Sales Method toEstimate Bad Debt Expense
At the beginning of the year, Penman Company had the followingaccount balances.
Accounts receivable...................... $356,000
Allowance for uncollectible accounts......... 21,400
During the year, Penman’s credit sales were $2,008,000, andcollections on accounts receivable were $1,963,000. The followingadditional transactions occurred during the year.
Feb. 17 Wrote off Bava’s account, $8,200.
May 28 Wrote off Reed’s account, $4,800.
Dec. 15 Wrote off Fischer’s account, $2,300.
Dec. 31 Recorded the bad debts expense assuming Penman’s policyis to record bad debts expense as 0.9% of credit sales. (Hint: Theallowance account is increased by 0.9% of credit sales
regardless of write-offs.)
Compute the ending balances in accounts receivable and theallowance for uncollectible accounts. Show how Penman’s December 31balance sheet reports the two accounts

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Computation of Ending balance in accounts receivables
Particulars	Amount
Beginning Accounts Receivables	$356,000.00
Add: credit Sales	$2,008,000.00
Less: Collection from customers	$1,963,000.00
Less: Customer balance written off ($8,200 + $4,800 + $2,300)	$15,300.00

Ending Balance in Accounts receivables	$385,700.00

Computation of Ending balance in allowance for uncollectible accounts - Penman Company
Particulars	Amount
Beginning balance in Allowance for uncollectible accounts	$21,400.00
Add: Bad debts expense for the year ($2,008,000*0.90%)	$18,072.00
Less: Write off receivables	$15,300.00

Ending Balance in Allowance for uncollectible accounts	$24,172.00

Penman Company
Balance Sheet (Partial)
Assets		Amount
Accounts receivables (Gross)	$385,700.00
Less: Allowance for uncollectible accounts	$24,172.00
Accounts receivables (Net)		$361,528.00

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In: AccountingAnalyzing and Reporting Receivable Transactions andUncollectible Accounts Using Percentage- of-Sales Method toEstimate Bad Debt...Analyzing and Reporting Receivable Transactions andUncollectible Accounts Using Percentage- of-Sales Method toEstimate Bad Debt ExpenseAt the beginning of the year, Penman Company had the followingaccount balances.Accounts receivable...................... $356,000Allowance for uncollectible accounts......... 21,400During the year, Penman’s credit sales were $2,008,000, andcollections on accounts receivable were $1,963,000. The followingadditional transactions occurred during the year.Feb. 17 Wrote off Bava’s account, $8,200.May 28 Wrote off Reed’s account, $4,800.Dec. 15 Wrote off Fischer’s account, $2,300.Dec. 31 Recorded the bad debts expense assuming Penman’s policyis to record bad debts expense as 0.9% of credit sales. (Hint: Theallowance account is increased by 0.9% of credit salesregardless of write-offs.)Compute the ending balances in accounts receivable and theallowance for uncollectible accounts. Show how Penman’s December 31balance sheet reports the two accounts