Required information Exercise 5.13A Compare the allowance method and the direct write-off method (L05-6) [The following information applies to the questions displayed below At the beginning of 2021, Brad's 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 widhes 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 $7500 are written off as uncollectible. Required information No Transaction General Journal Credit Debit 185,000 Accounts Receivable Service Revenue 185,000 Cash Accounts Receivable 180,000 ooo 0 0 0 0 180,000 No Journal Entry Required Bad Debt Expense Accounts Receivable 7.500 7.500 Required information Exercise 5.13A Compare the allowance method and the direct write-off method (L05-6) [The following information applies to the questions displayed below At the beginning of 2021, Brad's 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 widhes 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 $7500 are written off as uncollectible. Required information No Transaction General Journal Credit Debit 185,000 Accounts Receivable Service Revenue 185,000 Cash Accounts Receivable 180,000 ooo 0 0 0 0 180,000 No Journal Entry Required Bad Debt Expense Accounts Receivable 7.500 7.500