ces Exercise 5-13 (Algo) Compare the allowance method and the direct write-off method (LO5-6) At the beginning of 2024, Best Heating & Air (BHA) has a balance of $24,900 in accounts receivable. 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, install air conditioning systems on account, $179,000. 2. During 2024, collect $174,000 from customers on account. 3. At the end of 2024, estimate that uncollectible accounts total 10% of ending accounts receivable. 4. In 2025, customers' accounts totaling $2,100 are 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. Complete this question by entering your answers in the tabs below. Required 11 Required 2 Required 3 a aarticular transaction/event select "No Journal Entry
ces Exercise 5-13 (Algo) Compare the allowance method and the direct write-off method (LO5-6) At the beginning of 2024, Best Heating & Air (BHA) has a balance of $24,900 in accounts receivable. 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, install air conditioning systems on account, $179,000. 2. During 2024, collect $174,000 from customers on account. 3. At the end of 2024, estimate that uncollectible accounts total 10% of ending accounts receivable. 4. In 2025, customers' accounts totaling $2,100 are 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. Complete this question by entering your answers in the tabs below. Required 11 Required 2 Required 3 a aarticular transaction/event select "No Journal Entry
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Exercise 5-13 (Algo) Compare the allowance method and the direct write-off method (LO5-6)
At the beginning of 2024, Best Heating & Air (BHA) has a balance of $24,900 in accounts receivable. 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, install air conditioning systems on account, $179,000.
2. During 2024, collect $174,000 from customers on account.
3. At the end of 2024, estimate that uncollectible accounts total 10% of ending accounts receivable.
4. In 2025, customers' accounts totaling $2,100 are 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.
Complete this question by entering your answers in the tabs below.
Required 11
Required 2
Required 3
a aarticular transaction/event select "No Journal Entry
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