The Links Company Uses the Percent of Sales Method of Accounting

question 227

Essay

The Links Company uses the percent of sales method of accounting for uncollectible accounts receivable.During the current year,the following transactions occurred:
Sept 7 Links Company determined that the $\$ 8,000$ account receivable of the Rainier Company was uncollectible, and wrote it off.
Oct 15 Links Company detemined that the $\$ 3,500$ account receivable of the Olympic Company was uncollectible and wrote it off.
Nov 9 Rainier Company paid $\$ 6,000$ of the amount owed to the Links

Company.Links Company does not expect further collections from the Rainier Company.
$\text { Dec } 31 \text { Links Company estimates that } 1 \% \text { of its } \$ 1,900,000 \text { of credit }$

sales would be uncollectible.
1.Prepare the general journal entries to record these transactions.
2.If the balance of the allowance for uncollectible accounts was a $4,000 credit on January 1 of the current year,determine the balance of the allowance for uncollectible accounts at December 31 of the current year.Assume that the transactions above are the only transactions affecting the allowance for uncollectible accounts during the year.

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Definitions:

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