The Branson Company Uses the Percent of Sales Method of Accounting

question 175

Essay

The Branson Company uses the percent of sales method of accounting for uncollectible accounts receivable. During the current year, the following transactions occurred:
Mar 7 Branson Company determined that the $2,000 account receivable of the Bing Company was uncollectible, and wrote it off.
Jun 9 Bing Company paid $1,500 of the amount owed to the Branson Company. Branson Company does not expect further collections from the Bing Company.
Dec 31 Branson Company estimates that 1.5% of its $900,000 of credit sales will be uncollectible.
Prepare the general journal entries to record these transactions.

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Definitions:

Isocost Line

A line that represents all combinations of inputs which cost the same total amount.

Capital

Resources, such as equipment, buildings, and machinery, used in production to create goods and services.

Labor

The human effort, both physical and mental, that is used in the production process to create goods and services.

Slope

In mathematics and economics, the measure of the steepness or incline of a line, often used to describe changes in variables in relation to one another.