|Purpose:||(L.O. 3) This exercise will identify the two approaches of applying the allowance method of accounting for uncollectible accounts receivable.|
Howell's Department Store offers a store credit card for the convenience of its customers. Even though the store follows up on delinquent accounts, past experience indicates that a predictable amount of credit sales will ultimately result in uncollectible accounts. Howell uses the allowance method of accounting for uncollectible accounts. Bad debts are a material amount.