Allowance method: Income statement and balance sheet approaches. Tempe Company reported accounts receivable of $300,000 and an allow¬ance for uncollectible accounts of $31,000 (credit) on the December 31, 19X2, balance sheet. The following data pertain to 19X3 activities and operations: Sales on account $2,000,000 Cash collections from credit customers 1,600,000 Sales discounts 50,000 Sales returns & allowances 100,000 Uncollectible accounts written off 29,000 Collections on accounts that were previously written off 2,700
Instructions
a. Prepare journal entries to record the sales- and receivables-related trans¬actions from 19X3.
b. Prepare the December 31, 19X3, adjusting entry for uncollectible ac¬counts assuming that uncollectibles are estimated to be 2% of net credit sales.
c. Prepare the December 31, 19X3, adjusting entry for uncollectible ac¬counts assuming that uncollectibles are estimated at 1% of year-end accounts receivable.
d. Compute the amount of the adjusting entry in part(c) assuming that $46,000, rather than $29,000, of accounts were written off in 19X3.