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Uncollectable Accounts In Year-End Statements

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A company started the year with accounts receivable of $15,00 and an allowance for uncollectable accounts of $(1,500). During the year, sales (all account) were $110,000 and cash collections for sales amounted to $105,000. Also, $1,000 worth of uncollectable accounts were specifically identified and written off. Then, at year-end, the company estimated that 10% of ending accounts receivable would be collected.

A. What amount will be shown on the year-end income statement for bad debt expense?

B. What is the balance in the allowance for uncollectable accounts after all adjustments have been made?

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Solution Preview

(A)

AR 15,000 + 110,000 = 125,000
A/R balance + sales = total

125,000 - 105,000 = 20,000 - 1,000 = 19,000 x ...

Solution Summary

This solution calculates the amount shown on the year-end income statements for bad debt expense. This solution also calculates the balance in the allowance for uncollectible accounts after all adjustments have been made.

$2.19