Question

Analyzing and Reporting Receivable Transactions and Uncollectible Accounts Using Percentage-of-Sales Method to Estimate Bad Debt Expense
At the beginning of the year, Penman Company had the following account balances.

Accounts receivable $213,600

Allowance for uncollectible accounts12,840

During the year, Penman’s credit sales were $1,204,800, and collections on accounts receivable were $1,177,800. The following additional transactions occurred during the year.

Feb. 17 Wrote off Bava’s account, $4,920.
May 28 Wrote off Reed’s account, $2,880.
Dec. 15 Wrote off Fischer’s account, $1,380.
Dec. 31 Recorded the bad debts expense assuming Penman’s policy is to record bad debts expense as 0.9% of credit sales. (Hint: The allowance account is increased by 0.9% of credit sales regardless of write‑offs.)

Compute the ending balances in accounts receivable and the allowance for uncollectible accounts and show how Penman’s December 31 balance sheet reports the two accounts.

Note: Round your answers to the nearest whole dollar.
Note: Do not use a negative sign with your answers.

Current Assets
Accounts receivable	Answer
Less allowance for uncollectible accounts	Answer	Answer

Answer 1

Calculate ending balance of account receivable

Beginning balance	213600
Credit sales	1204800
Collection	-1177800
Write off (4920+2880+1380)	-9180
Ending balance	231420

Calculate ending balance of allowance for doubtful accounts

Beginning balance	12840
Bad debt expense (1204800*.9%)	10843
Write off	-9180
Ending balance	14503

Note: Do not use a negative sign with your answers.

Current Assets
Accounts receivable	231420
Less allowance for uncollectible accounts	-14503	216917