Problem 9-1

How do I write off uncollectible account, and record expense under alternative methods of estimation (L.O. 1)

As of December 31, 2017, Fargo Company's accounts prior to adjustment show:

Accounts receivable $ 40,000

Allowance for uncollectible accounts (credit balance) 750

Sales 250,000

Fargo Company estimates uncollectible accounts at 2% of sales.

On February 23, 2018, the account of Dan Hall in the amount of $450 was considered uncollectible and written off. On August 12, 2018, Hall remitted $300 and indicated that he intends to pay the balance due as soon as possible. By December 31, 2018, no furtherremittance had been received from Hall, and no further remittance was expected.

a. how do I prepare journal entries to record all of these transactions and adjusting entries.

b. how do I give the entry necessary as of December 31, 2017, if Fargo Company estimated its uncollectible accounts at 8% of outstanding receivables rather than at 2% of sales.