Response to the following :
Refer to problem.
Required:
1. Record uncollectible-account expense for October using the direct write-off method.
2. What amount of accounts receivable would German Imports report on its October 31 balance sheet under the direct write-off method? Does German Imports expect to collect the full amount?
Problem:
During October, German Imports had sales of $180,000, which included $120,000 in credit sales. October collections were $90,000. Other data include
• September 30 debit balance in accounts Receivable, $28,000
• September 30 credit balance in Allowance for Uncollectible Accounts, $1,000
• Uncollectible-account expense, estimated as 2% of credit sales
• Write-offs of uncollectible receivables totaled $1,200
Required
1. Prepare journal entries to record sales, collections, uncollectible-account expense by the allowance method (percent-of-sales method), and write-offs of uncollectibles during October.
2. Show the ending balances in Accounts Receivable, Allowance for Uncollectible Accounts, and net accounts receivable at October 31. How much does German Imports expect to collect?