70.2K

Verified Solution

Link Copied!

Analyzing and Reporting Receivable Transactions and Uncollectible Accounts Using Percentage$-$of$-$Sales Method to Estimate Bad Debt Expense

At the beginning of the year, Penman Company had the following account balances.

During the year, Penman's credit sales were $$3,012,000,$ and collections on accounts receivable were $$2,944,500.$ The following additional transactions occurred during the

year.

Feb. $17$ Wrote off Bava's account, $$12,300.$

May $28$ Wrote off Reed's account, $$7,200.$

Dec. $15$ Wrote off Fischer's account, $$3,450.$

Dec. $31$ Recorded the bad debts expense assuming Penman's policy is to record bad debts expense as $0\mathrm{.}9\%$ of credit sales. $($Hint: The allowance account is increased by

$0\mathrm{.}9\%$ of credit sales regardless of write$-$offs.$)$

Compute the ending balances in accounts receivable and the allowance for uncollectible accounts and show how Penman's December $31$ balance sheet reports the two

accounts.

Note: Round you

Analyzing and Reporting Receivable Transactions and Uncollectible Accounts Using Percentage$-$of$-$Sales Method to Estimate Bad Debt Expense

At the beginning of the year, Penman Company had the following account balances.

During the year, Penman's credit sales were $$3,012,000,$ and collections on accounts receivable were $$2,944,500.$ The following additional transactions occurred during the

year.

Feb. $17$ Wrote off Bava's account, $$12,300.$

May $28$ Wrote off Reed's account, $$7,200.$

Dec. $15$ Wrote off Fischer's account, $$3,450.$

Dec. $31$ Recorded the bad debts expense assuming Penman's policy is to record bad debts expense as $0\mathrm{.}9\%$ of credit sales. $($Hint: The allowance account is increased by

$0\mathrm{.}9\%$ of credit sales regardless of write$-$offs.$)$

Compute the ending balances in accounts receivable and the allowance for uncollectible accounts and show how Penman's December $31$ balance sheet reports the two

accounts.

Note: Round your answers to the nearest whole dollar.

Note: Do not use a negative sign with your answers.

Current Assets

Accounts receivable

Less allowance for uncollectible accounts

$r answers to the nearest whole dollar.

Note: Do not use a negative sign with your answers.

Answer & Explanation Solved by verified expert

See Answer