Chapter 9, Problem S9.5SE

Applying the allowance method to account for uncollectibles

Learning Objective 3

The Accounts Receivable balance and Allowance for Bad Debts for Signature Lamp Company at December 31, 201 7, was $10,800 and $2,000 (credit balance), respectively During 2018. Signature Lamp Company completed the following transactions:

a Sales revenue on account. $273,400 (ignore Cost of Goods Sold).
b Collections on account. $223,000.
c Write-offs of uncollectibles, $5,900
d. Bad debts expense of $5200 was recorded

Requirements

1 Journalize Signature Lamp Company’s transactions for 2018 assuming Signature Lamp Company uses the allowance method.
2 Post the transactions to the Accounts Receivable, Allowance for Bad Debts, and Bad Debts Expense T-accounts, and determine the ending balance of each account.
3. Show how accounts receivable would be reported on the balance sheet at December 31, 201 8.