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Chapter 2
Accounting for Receivables
AP-3B (
2
3
)
B&B Company uses the allowance method to account for uncollectible receivables. During 2016,
the company made total credit sales of $1,250,000, of which $300,000 was owed by customers
at year-end. According to the company’s historical sales, 1.5% of the amount will be uncollected.
B&B Company uses an income statement approach to estimate the amount of uncollectible
receivables. The company’s year-end is December 31. Prepare the journal entry to account for
the amount deemed uncollectible.
Date
Account Title and Explanation
Debit
Credit
AP-4B (
2
)
After analyzing the current accounts receivable, your company decides that the allowance
for doubtful accounts should have an ending normal balance of $5,870. There is a $850 credit
balance in the account. Prepare the journal entry to set up the required allowance.
Date
Account Title and Explanation
Debit
Credit
