Planters, Inc., completed the following transactions during 19X1 and 19X2:

19X1 Dec. 31 Began using the allowance method to account for uncollectibles. Estimated that uncollectible-account expense for the year was 1 percent on credit sales of \(\$ 300,000\), and recorded that amount as expense. The accounts receivable balance is \(\$ 113,500\).

31 Made the appropriate closing entry.

\(19 \mathrm{X} 2\)

Jan. 17 Sold inventory to D. Lovecky, \(\$ 652\), on credit terms of \(2 / 10 \mathrm{n} / 30\).

June 29 Wrote off the D. Lovecky account as uncollectible after repeated efforts to collect from her.

Aug. 6 Received \(\$ 250\) from D. Lovecky, along with a letter stating her intention to pay her debt in full within 30 days. Reinstated her account in full.

Sep. 4 Received the balance due from D. Lovecky.

Dec. 31 Made a compound entry to write off the following accounts as uncollectible: Bernard Klaus, \(\$ 837\); Louis Mann, \(\$ 348\); and Millie Burnett, \(\$ 622\).

31 Observed that collection losses are lower than expected. Estimated that uncollectibleaccount expense for the year was \(1 / 2\) of 1 percent on credit sales of \(\$ 420,000\), and recorded that amount as expense.

31 Made the appropriate closing entry.

\section*{Required}

1. Open general ledger accounts for Allowance for Uncollectible Accounts and UncollectibleAccount Expense. Keep running balances.

2. Record the transactions in the general journal, and post to the two ledger accounts.

3. The December 31, 19X2, balance of Accounts Receivable is \(\$ 130,000\). Show how Accounts Receivable would be reported at December 31, 19X1 and 19X2. Why do you think Planters, Inc., decreased its uncollectible accounts percentage from 1 percent to \(1 / 2\) of 1 percent in \(19 \mathrm{X} 2\) ?

4. Assume that Planters, Inc., begins aging accounts receivable on December 31, 19X2 The balance in Accounts Receivable is \(\$ 130,000\), the credit balance in Allowance for Uncollectible Accounts is \(\$ 1,193\), and the company estimates that \(\$ 3,293\) of its accounts receivable will prove uncollectible.

a. Make the adjusting entry for uncollectibles.

b. Show how Accounts Receivable will be reported on the December 31, 19X2, balance sheet. Compare net accounts receivable at December \(31,19 \times 2\), with the amount reported in Requirement 3 above. Why do you think the two sets of figures agree or disagree?

Using the percentage of sales and aging approaches for uncollectibles (Obj. 2, 6)