Answer:
($455,000
)
Explanation:
When sales are made on account, the entries required are;
Debit Sales/Revenue
Credit Accounts Receivables
The company may then estimate that part of the receivables may be uncollectible. For this, entries required are;
Debit Bad debts expense
Credit Allowance for doubtful debt (B/s)
When the amounts provided for becomes uncollectible, the entries then become
Debit Allowances for doubtful debts
Credit Accounts receivables
to write off the amount from account receivables.
Hence where 3% of Farley's credit sales have been uncollectible, this amounts to
= 3% of $18,900,000
= $567,000
Considering the above entries
Amount to be reported as allowance for uncollectible at 31 December , 2021
= ($522,000) + $634,000 + ($567,000)
= ($455,000
)
