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At the beginning of 2021, Brads Heating & Air (BHA) has a balance of $25,500 in accounts receivable. Because BHA is a privately owned company, the company has used only the direct write-off method to account for uncollectible accounts. However, at the end of 2021, BHA wishes to obtain a loan at the local bank, which requires the preparation of proper financial statements. This means that BHA now will need to use the allowance method. The following transactions occur during 2021 and 2022.

1. During 2021, install air conditioning systems on account, $185,000.

2. During 2021, collect $180,000 from customers on account.

3. At the end of 2021, estimate that uncollectible accounts total 10% of ending accounts receivable.

4. In 2022, customers accounts totaling $7,500 are written off as uncollectible.

1 2 3 4 During 2021, install air conditioning systems on account, $185,000 Note: Enter debits before credits. Transaction General Journal Debit Credit 1 Record entry Clear entry View general journal A 1 2 3 During 2021, collect $180,000 from customers on account Note: Enter debits before credits. Transaction General Journal Debit Credit 2 Record entry View general journal Clear entry A 1 2 4 At the end of 2021, estimate that uncollectible accounts total 10% of ending accounts receivable. Note: Enter debits before credits. General Journal Transaction Debit Credit 3 Record entry Clear entry View general journal