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6B-12 REEBOK employees shouldn't act too smug about its shorter collection period, since its allowance for bad debt was nearly 10% of net accounts eollction for NIXEA,thr was neuly t's receivable in 20x1 versus 3% for NIKE) Problems for Section 6B 6B-1. On May 1 the WILLIAMS Company had a $45,000 debit balance in Accounts Receivable. During May the company had total sales of $235,000. Of this amount, $197,000 was on account. In addition, during May the company collected $233,000 on accounts receivable and wrote off, as uncollectible, two customers' accounts one for $2,100 and the other in the amount of $4,200. The company uses the direct write-off method Required: 1. Beginning with the appropriate T-accounts, show the entries necessary to record the sales revenue, the collection of receivables, and the write-off of the two uncollectible accounts. What is the ending balance in accounts receivable? (Be sure to label each entry in the T-accounts.) 2. What is wrong with using the direct write-off method when write-offs are significant? 6B-2. (Similar to problem 6B-1) On June 1 the ANDREA Corporation had a S2,450,000 debit balance in Accounts Receivable. During June, the compan had total sales of $8,600,000. Of this amount, $400,000 was cash. In addition, during June the company collected $7,680,000 of the accounts receivable and wrote off as uncollectible, two customers' accounts - one for $19,000 and the other in the amount of $11,000. The company uses the direct write-off method. Required: 1. Beginning with the appropriate T-accounts, show the entries necessary to record the sales revenue, the collection of receivables, and the write-off of the two uncollectible accounts. What is the ending balance in accounts receivable? (Be sure to label each entry in the T-accounts.) 2. ANDREA company expects that about 5% of credit sales will become bad debt - using this example, explain why the direct-write off method is not appropriate for ANDREA corporation. 6B-3*. Do problem 6B-2, requirement 1, using the allowance method, with bad debt estimated as 5% of credit sales for the month of June Chapter 6 Section B

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