The account allowance for uncollectible accounts is classified as a(n contra account to uncollectible accounts expense. expense.
2 answers:
<u>Answer:</u>
The account allowance for uncollectible accounts is classified as a contra account to accounts receivable.
<u>Explanation:</u>
- It is a contra asset account. It is the allowance for bad debt reserve or doubtful actions.
- Contra accounts are reported on the financial statement same as that of the associated account, appearing directly below the associated account with a
line for the net amount.
- They are useful in preserving the historical value in main account while denoting a decrease in a separate contra account that sums to the current book value.
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Answer: 6%
Explanation:
The annual payments can be considered to be annuity payments as they are constant. The amount borrowed can be considered the present value of the annuity.
Present value of annuity = Annuity * Present value interest factor of annuity, 8 years, %?
178,960 = 28,819 * Annuity factor
Annuity factor = 178,960 / 28,819
= 6.20979
To find out the interest rate, look at the Present Value of Annuity table and go to the 8 period column. Look for 6.20979. The interest rate that intersects with this factor is the interest rate implicit in this agreement.
That rate is 6%.
