JAC Company sells sports equipment on credit and uses the allowance method to estimate uncollectible accounts receivable. On January 1, 20X2 accounts receivable was $40,000 and allowance for uncollectible accounts was $2,400. During the year, sales on credit were $450,000, $6,000 of accounts from Wingert Company were written off as uncollectible, and $350,000 was collected from customers, leaving accounts receivable at $100,000 on December 31, 20X2.

1. JAC Company sells sports equipment on credit. It provides for uncollectible accounts using a
percentage of 6% of Accounts Receivable on December 31, 20X2 to determine the desired
balance under the allowance method. On January 1, 20X2, the following selected account
balances existed:
DR.
CR.
Accounts Receivable
$40,000
Allowance for Uncollectible Accounts
2,400
During 20X2, the following summary transactions occurred:
a.        Sales on account were $450,000.
b.        Accounts of Wingert Company, written off on September 1, 20X2, as
uncollectible, totaled $6,000.
c.        Collections of customers on account were $350,000.
DR. CR.
Accounts Receivable $40,000
Allowance for Uncollectible Accounts 2,400
Solution
a. sales account should be debited to $450,000
i.e. Cash account Debtor to sales account of amount $450,000

2. b. bad debts account is debited by $6000 which as uncollectable credits
total sales was $450,000 and received amount is $350,000, the remaining amount 100,000 should
be accounts receivables.
but the given number $6,000 is not right, it should be $60,000