Loughlin Company uses the allowance method to estimate losses from uncollectible

Question

Loughlin Company uses the allowance method to estimate losses from uncollectible accounts.  Net sales for the year are $960,000.  The accounts receivable balance at year-end is $240,000 and the company estimates its bad debts as 1 percent of accounts receivable.  If there is already an $800 credit balance in allowance for uncollectible accounts, how much should be recorded as uncollectible accounts expense?

Company uses the allowance method to estimate losses from uncollectible accounts. Net sales for the year are $960,000. The accounts receivable balance at year- end is $240,000 and the company estimates its bad debts as 1 percent of accounts receivable. If there is already an $800 credit balance in allowance for uncollectible accounts, how much should be recorded as uncollectible accounts expense?

Explanation / Answer

uncollectible accounts expense = 800 - (240000 * 0.01) = 1600

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