Allowance method

1. Allowance method: Income statement and balance sheet
   
   approaches.Tempe
   
   Company reported accounts receivable of $300,000 and an allow­ance for
   
   uncollectible accounts of $31,000 (credit) on the December 31, 19X2, balance
   
   sheet. 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 to
   
   record the sales- and receivables-related trans­actions from 19X3.
2. Prepare the December 31,
   
   19X3, adjusting entry for uncollectible ac­counts assuming that uncollectibles
   
   are estimated to be 2% of net credit sales.
3. Prepare the December 31,
   
   19X3, adjusting entry for uncollectible ac­counts assuming that uncollectibles
   
   are estimated at 1% of year-end accounts receivable.
4. Compute the amount of the
   
   adjusting entry in part (c) assuming that $46,000, rather than $29,000, of
   
   accounts were written off in 19X3.