Question

Tablet Co. estimates uncollectible accounts using the percentage-of-receivables method and expects that 2 percent of outstanding receivables will be uncollectible for 2018. The balance in Accounts Receivable is $5,300,000, and the allowance account already has a $82,000 balance before adjustments at year-end. The additional uncollectible accounts expense for 2018 will be:

Answer 1

Answer:

$24,000

Explanation:

Given that,

Balance in Accounts Receivable = $5,300,000

Balance in the allowance account before adjustments at year-end (we are assuming credit balance) = $82,000

Estimated percentage of uncollectible accounts = 2%

Uncollectible accounts expense for 2018:

= Expected uncollectible accounts for 2018 - Balance in the allowance account

= ($5,300,000 × 2%) - $82,000

= $106,000 - $82,000

= $24,000