At the beginning of 2024, Best Heating & Air (BHA) has a balance of $25,800in accounts recelvable. Because BHA is a privately owned company, the company has used only the direct write-off method to account for uncollectible accounts. However, at the end of 2024, BHA wishes to obtain a loan at the local bank, which requires the preparation of proper financial statements. This means that BHA now will need to use the allowance method. The following transactions occur during 2024 and 2025. 1. During 2024, instail air conditioning systems on account,$188,000. 2. During 2024, collect$183,000from customers on account. 3. At the end of 2024 , estimate that uncollectible accounts total10%of ending accounts recelvable. 4. In 2025, customers' accounts totaling$2,000are written off as uncollectible. Required: 1. Record each transaction using the allowance method. 2. Record each transaction using the direct write-off method. 3. Calculate bad debt expense for 2024 and 2025 under the allowance method and under the direct write-off method, prior to any adjusting entries in 2025.
At the beginning of 2024, Best Heating & Air (BHA) has a balance of $25,800in accounts recelvable. Because BHA is a privately owned company, the company has used only the direct write-off method to account for uncollectible accounts. However, at the end of 2024, BHA wishes to obtain a loan at the local bank, which requires the preparation of proper financial statements. This means that BHA now will need to use the allowance method. The following transactions occur during 2024 and 2025. 1. During 2024, instail air conditioning systems on account,$188,000.
2. During 2024, collect$183,000from customers on account.
3. At the end of 2024 , estimate that uncollectible accounts total10%of ending accounts recelvable.
4. In 2025, customers' accounts totaling$2,000are written off as uncollectible.
Required: 1. Record each transaction using the allowance method.
2. Record each transaction using the direct write-off method.
3. Calculate
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