Refer to exercise E5-21.

Exercise 5-21

On June 30, 2014, Perfect Party Planners (PPP) had a $40,000 balance in Accounts Receivable and a $3,000 credit balance in Allowance for Uncollectible Accounts. During July, PPP made credit sales of $75,000. July collections on account were $60,000, write-offs of uncollectible receivables totalled $2,200, and an account of $1,000 was recovered. Bad debt expense is estimated as 2% of revenue.

Requirements

1. Record bad debt expense for July by the direct write-off method.

2. What amount of accounts receivable would Perfect Party Planners (PPP) report on its July

31 balance sheet under the direct write-off method? Does PPP expect to collect the full amount?