Prepare Entries to Record the Following Transactions Using the Direct

question 67

Essay

Prepare entries to record the following transactions using the direct write-off method for uncollectibles.

a. The firm assumes that approximately 1% of total sales on account will prove uncollectible. Sales for Year 1 are $1,000,000. All sales are on account.

b. On July 7, Year 2, it is determined that an account of $2,000 will not be collected.

c. On August 14, Year 2, it is determined that an account of $3,000 will not be collected.

d. On December 31, Year 2, the company estimates that 2% of total credit sales of $2,000,000 will be uncollectible.

e. On February 1, Year 3, it is determined that accounts of $6,000 will not be collected.

f. On March 2, Year 3, $1,000 is collected on an account that had previously been written off as uncollectible in (e). It is determined that the account was originally written off in error.

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