Q1. On August 12, a company provides services on account to a customer for $3,900. However, on August 16, the customer is not completely satisfied with the service and the company grants an allowance on the amount owed of $450. On August 20, the customer makes full payment of the balance owed, excluding the allowance.
Record the services provided on August 12, the sales allowance on August 16, and the cash collection on August 20.
Q2. At the end of the year, a company has a balance in Allowance for Uncollectible Accounts of $290 (credit) before any year-end adjustment. The balance of Accounts Receivable is $15,800. The company estimates that 14% of accounts receivable will not be collected over the next year.
Record the adjustment for uncollectible accounts.