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Chapter 2
Accounting for Receivables
AP-6A (
2
3
)
The Green Earth Company uses the allowance method to account for uncollectible
receivables. The company uses the income statement approach for estimating uncollectible
receivables. During the fiscal year 2016, the company had credit sales of $2,300,000.
It estimates that 1.5% of these sales will be uncollectible. Green Earth Company has a
December 31 year-end. Prepare the journal entry to record the uncollectible receivables on
December 31, 2016.
Date
Account Title and Explanation
Debit
Credit
AP-7A (
2
)
On June 15, 2016, you discover that your customer, Tyrone Huntzinger, has gone bankrupt. He
owes you $1,000.
Required
a) Prepare the appropriate journal entry to write off bad debt assuming AFDA has already
been estimated and recorded in the past.
Date
Account Title and Explanation
Debit
Credit
