Question Thefollowing information is available for XYZ Company: January 1, 2004

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Question

Thefollowing information is available for XYZ Company:

                      January 1, 2004      December 31, 2004

Accounts receivable      65,000                   ?

Thefollowing information was taken from XYZ Company's 2004 incomestatement:

Salesrevenue                  $500,000

Cost of goodssold              260,000

Salariesexpense                 70,000

Rentexpense                     40,000

Income taxexpense               39,000

Netincome                     $ 91,000

In its2004 statement of cash flows, XYZ Company reported cash collectedfrom customers of
$446,000. Additionally, it is known that XYZ Company's averagecollection period for 2004
was 58.40 days. Calculate the amount of accounts receivablewritten off as uncollectible
by XYZ Company during 2004. Do not use decimals in youranswer.

Question

Explanation / Answer

Trade Debtors at theend Net Credit Sales * Average CollectionPeriod / 360 500,000 * 58.4 / 360 81,111.00 Accounts Receivableuncollectible Opening Balance -   65,000 Add : Credit Sales - 500,000 565,000.00 Less: Cash Received -   446000 Closing Balance -    81,111 (527,111.00) Accounts Receivableuncollectible 37,889.00

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