Tempe Company - Allowance method: Income statement and balance sheet approaches

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 un-collectibles are estimated to be 2% of net credit sales.
3. Prepare the December 31, 19X3, adjusting entry for uncollectible ac­counts assuming that un-collectibles 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.