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How much is the provision for uncollectible accounts

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    Assignment ID: FG133136212

    Question – BB Company began operations on January 1, 2019.  On December 31, 2019, BB provided for uncollectible accounts based on 5% of annual credit sales.  On January 1, 2020, BB changed its method of determining its allowance for uncollectible accounts to the percentage of accounts receivable.  The rate of uncollectible accounts was determined to be 15% of the ending accounts receivable balance. In addition, BB wrote off all accounts receivable that were over 1 year old.  The following additional information relates to the years ended December 31, 2019 and 2020.

     

    2020

    2019

    Credit sales

    P8,000,000

    P6,000,000

    Collections (including collections on recovery)

    6,950,000

    4,500,000

    Accounts written off

    70,000

    None

    Recovery in accounts previously written off

    20,000

    None

    Required – How much is the provision for uncollectible accounts for the year ended December 31, 2020?

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