Question

On January 1, Year 2, Kincaid Company's Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $62,600 and $1,100, respectively. During Year 2, Kincaid reported $148,000 of credit sales, wrote off $1,150 of receivables as uncollectible, and collected cash from receivables amounting to $154,500. Kincaid estimates that it will be unable to collect one percent (1%) of credit sales.
The amount of uncollectible accounts expense recognized in the Year 2 income statement will be:__________

Answer 1

Answer:

$2,630

Explanation:

First we calculate the estimated amount that would not be collected. This is 1% of Credit Sales.

148,000 x 1% = $1,480

Then we add the estimated amount with the amount written off as receivables uncollected for the Year 2. As shown below:

1,480 + 1,150 = $2,630

Hence, the amount of uncollectible accounts expense recognized in the Year 2 income statement will be $2,630.