The following information relates to a company's accounts receivable: gross accounts receivable balance at the beginning...

The following information relates to a company's accounts receivable: gross accounts receivable balance at the beginning of the year, $420,000; allowance for uncollectible accounts at the beginning of the year, $31,000 (credit balance); credit sales during the year, $1,550,000; accounts receivable written off during the year, $22,000; cash collections from customers, $1,600,000. Assuming the company estimates bad debts at an amount equal to 2% of credit sales.

1. Calculate bad debt expense for the year.

2. Calculate the year-end balance in the allowance for uncollectible accounts.

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Expert Solution

Requirement 1: Bad Debt Expense = $ 1550000 Credit sales x 2%
= $ 31,000
Requirement 2: Year end balance in Allowance account
= $ 31000 beg balance – 22000 written off + 31000 bad debt expense
= $ 40,000

ekkarill92 answered 2 years ago

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