Allowance method:

1. Allowance method: Income statement and balance sheetapproaches. TempeCompany reported accounts receivable of $300,000 and an allow­ance foruncollectible accounts of $31,000 (credit) on the December 31, 19X2, balancesheet. The following data pertain to 19X3 activities and operations:

   

 

Sales  on account

    

 

$2,000,000

     

Cash  collections from credit customers

     

1,600,000

     

Sales  discounts

     

50,000

     

Sales  returns & allowances

     

100,000

     

Uncollectible  accounts written off

     

29,000

     

Collections  on accounts that were previously written off

     

2,700

   

Instructions

1. Prepare journal entries torecord the sales- and receivables-related trans­actions from 19X3.
2. Prepare the December 31,19X3, adjusting entry for uncollectible ac­counts assuming that uncollectiblesare estimated to be 2% of net credit sales.
3. Prepare the December 31,19X3, adjusting entry for uncollectible ac­counts assuming that uncollectiblesare estimated at 1% of year-end accounts receivable.
4. Compute the amount of theadjusting entry in part (c) assuming that $46,000, rather than $29,000, ofaccounts were written off in 19X3.