P5-4A Pearl E. White Orthodontist specializes in correcting misaligned teeth. During 2018, Pearl provides services on account of $590,000. Of this amount, $80,000 remains receivable at the end of the year. An aging schedule as of December 31, 2018, is provided below.
Required: 1. Calculate the allowance for uncollectible accounts. 2. Record the December 31, 2018, adjustment, assuming the balance of Allowance for Uncollectible Accounts before adjustment is $5,000 (credit). 3. On July 19, 2019, a customer's account balance of $8,000 is written off as uncollectible. Record the write-off. 4. On September 30, 2019, the customer whose account was written off in Requirement 3 unexpectedly pays the full amount. Record the cash collection. P5-5A In an effort to boost sales in the current year, Roy's Gym has implemented a new program where members do not have to pay for their annual membership until the end of the year. The program seems to have substantially increased membership and revenues. Below are year-end amounts.
Record transactions related to uncollectible accounts (L05-4.5-5)
Compare the direct write-off method to the allowance method (L05-3, 5-6)