Exercise $5-13($Algo$)$ Compare the allowance method and the direct write$-$off method $($LO$5-6)$

At the beginning of $2024,$ Best Heating & Air $($BHA$)$ has a balance of $$24,900$ 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 $2024,$ 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 $2024$ and $2025.$

During $2024,$ install air conditioning systems on account, $$179,000.$

During $2024,$ collect $$174,000$ from customers on account

At the end of $2024,$ estimate that uncollectible accounts total $10\%$ of ending accounts receivable

In $2025,$ customers' accounts totaling $$2,100$ are written off as uncollectible.

Required:

Record each transaction using the allowance method.

Record each transaction using the direct write$-$off method.

Calculate bad debt expense for $2024$ and $2025$ under the allowance method and under the direct write$-$off method, prior to any adjusting entries in $2025.$

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