E$5-43.$ Analyzing and Reporting Receivable Transactions and Uncollectible Accounts Using Percentage$-$

of$-$Sales Method to Estimate Bad Debt Expense

At the beginning of the year, Penman Company had the following account balances.

Accounts receivable $.........................$ $$356,000$

Allowance for uncollectible accounts dotsdotsdots,$21,400$

During the year, Penman's credit sales were $$2,008,000,$ and collections on accounts receivable were

$$1,963,000.$ The following additional transactions occurred during the year.

Feb. $17$ Wrote off Bava's account, $$8,200.$

May $28$ Wrote off Reed's account, $$4,800.$

Dec. $15$ Wrote off Fischer's account, $$2,300.$

Dec. $31$ Recorded the bad debts expense assuming Penman's policy is to record bad debts expense

as $0\mathrm{.}9\%$ of credit sales. $($Hint: The allowance account is increased by $0\mathrm{.}9\%$ of credit sales

regardless of write$-$offs.$)$

Compute the ending balances in accounts receivable and the allowance for uncollectible accounts.

Show how Penman's December $31$ balance sheet reports the two accounts.