The following information relates to a company\'s accounts receivable: accounts
ID: 2510637 • Letter: T
Question
The following information relates to a company's accounts receivable: accounts receivable balance at the beginning of the year $460,000, allowance for urcollectible accounts at the beginning of the year, S35000 ?credit balance:credit sales during he year $1750000, accounts receivable written off during the year, $26,000: cash collections from customers, $1,900,000. Assuming the company estimates that future bad debts will equal 8% of the year-end balance in accounts receivable. 1. Calculate the year-end balance in the allowance for uncollectible accounts 2. Calculate bad debt expense for the year. 1 Ending balance 2Bad debt expense St oD STANDARD COSTING EXAMPLE STANDARD ACTUAL 20 000 20,000 0 cartridiges2.25 cartdg per rean5perream per book rea our595 per hour
Explanation / Answer
1.Year End Balance in the allowance for uncollectible accounts = $31,720
Year end balance in Accounts Receivable = Beginning balance of accounts receivable + Credit sales - write-offs - Cash collections
= 460000 + 1750000 – 26000 – 1900000
= $2,84,000
Bad Debt = $2,84,000 * 8% = $22,720
year-end balance in the allowance for uncollectible accounts
= Beginning balance in the uncollectible accounts + bad debts during the year – accounts receivable written off
= $35,000 + $22,720 -$26,000
= $31,720
2.Bed Debt Expense for the year = $22,720
Bad Debt Expenses = $2,84,000 * 8% = $22,720
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