Bad Debt and Uncollectible Accounts
Not what you're looking for?
The following information relates to a company's accounts receivable: accounts receivable balance at the beginning of the year, $300,000; allowance for uncollectible accounts at the beginning of the year, $25,000 (credit balance); credit sales during the year, $1,500,000; accounts receivables written off during the year, $16,000; cash collections from customers, $1,450,000. Assuming the company estimates bad debts at an amount equal to 2% of credit sales, calculate the following:
1. bad debt expense for the year
2. year-end balance in the allowance for uncollectible accounts
If the company estimates that future bad debts will equal 10% of the year-end balance in accounts receivable, calculate the following:
1. bad debt expense for the year
2. year-end balance in the allowance for uncollectible accounts.
Purchase this Solution
Solution Summary
The solution calculates bad debt and uncollectible accounts.
Solution Preview
A. Based on percent of credit sales
1. Bad debt expense is directly calculated based on the percent of credit sales. Total credit sales = 1,500,000. Percentage = 2%
Bad debt expense = 1,500,000 X 2% = $30,000
2. The opening balance in allowance account = ...
Purchase this Solution
Free BrainMass Quizzes
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.
Learning Lean
This quiz will help you understand the basic concepts of Lean.
Paradigms and Frameworks of Management Research
This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.
Balance Sheet
The Fundamental Classified Balance Sheet. What to know to make it easy.
Motivation
This tests some key elements of major motivation theories.