The general ledger account for Accounts Receivable shows a debit balance of $40,

Question

The general ledger account for Accounts Receivable shows a debit balance of $40,000. The Allowance for Uncollectible Accounts has a credit balance of $2,000. Net sales for the year were $250,000. In the past, 3 percent of net sales have proved uncollectible. An aging of accounts receivable accounts results in an estimate of $9,000 of uncollectible accounts receivable.

Calculate (1) Uncollectible Accounts Expense and (2) the ending balance of the Allowance for Uncollectible Accounts using (a) the percentage of net sales method and (b) the accounts receivable aging method.

Create an Excel spreadsheet

Explanation / Answer

1. (a) $7,500 ($250,000 ? .03) (b) $7,000 ($9,000 – $2,000) 2. (a) $9,500 ($7,500 + $2,000) (b) $9,000 (given)

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