P8-27A      Accounting for uncollectible accounts using the allowance method, and reporting receivables on the balance sheet [25–35 min]

At September 30, 2012, the accounts of Mountain Terrace Medical Center (MTMC) include the following:

Accounts receivable

$145,000

Allowance for uncollectible accounts (credit balance)

3,500

During the last quarter of 2012, MTMC completed the following selected transactions:

Requirements

1. Journalize the transactions.
2. Open the Allowance for uncollectible accounts T-account, and post entries affecting that account. Keep a running balance.
3. Show how Mountain Terrace Medical Center should report net accounts receivable on its December 31, 2012 balance sheet. Use the three line reporting format.