## Answers

1. 11% of receivables : | |||||||

Allowance for uncollectible accounts for year ended 31/12/2021 = 35,000*11% = 3850 | |||||||

Allowance for uncollectible accounts already recognized = 1200 | |||||||

Hence, further allowance to be recorded = 3850-1200 = 2650 | |||||||

No. | Date | General Journal | Debit | Credit | |||

1 | December 31, 2021 | Bad Debt expense a/c ..Dr | 2,650 | ||||

To Allowance for Uncollectible Accounts | 2,650 | ||||||

2. 3% of Credit sales | |||||||

Allowance for uncollectible accounts for year ended 31/12/2021 = 240000*3% = 7200 | |||||||

Allowance for uncollectible accounts already recognized = 1200 | |||||||

Hence, further allowance to be recorded = 7200-1200 = 6000 | |||||||

No. | Date | General Journal | Debit | Credit | |||

2 | December 31, 2021 | Bad Debt expense a/c ..Dr | 6,000 | ||||

To Allowance for Uncollectible Accounts | 6,000 | ||||||

3. Effect on net income and Total assets under both methods | |||||||

Percentage of Receivables Method | Percentage of Credit Sales Method | ||||||

Before | After | Effect/change | Before | After | Effect/change | ||

Total Assets (Accounts receivable net of Allowance a/c) | 33800 | 31150 | -2650 | 33800 | 27800 | -6000 | |

Net Income | 240000 | 237350 | -2650 | 240000 | 234000 | -6000 | |

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