mating uncollectible accounts expense: Harris Corporation had the following acco
ID: 2577049 • Letter: M
Question
mating uncollectible accounts expense: Harris Corporation had the following accounts receivable and allowance for uncollectible accounts balances at the end of 2016 before any write off and expense adjustment. Accounts Receivable (before write-off) $800,000 Debit Allowance for Doubtful Accounts (before write-off) $3,000 Credit Sales in 2016 totaled $1,400,000. Sales returns and allowances $50,000. Write-off of accounts amounted to $2,000. Required Calculate uncollectible accounts expense and ending balance for the allowance for uncollectible accounts under the following independent assumptions: 1.5% of credit sales will prove uncollectible. 5% of ending accounts receivable are uncollectible.. 1. a. b,Explanation / Answer
a. Uncollectible account expense = 1.5%of credit sales
= 1,400,000 * 1.5% = 21,000.
Ending balance in allowance for uncollectible accounts = Allowance for doubtful accounts(credit) before write off and adjustments + Uncollectible account expense for the year - Write off
= 3,000 + 21,000 - 2,000
= 22,000.
b. Accounts receivable after write off = 800,000 - 2,000 = 798,000
Ending balance for allowance for uncollectible accounts = 798,000 * 5% = 39,900
Uncollectible accounts expense = Ending balance for allowance for uncollectible accounts - Allowance for doubtful accounts before adjustments
= 39,900 - 3,000
= 36,900.
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