1) As of January 1, 2018, Barley Co. had a credit balance of $520,000 in its all
ID: 2549632 • Letter: 1
Question
1) As of January 1, 2018, Barley Co. had a credit balance of $520,000 in its allowance for uncollectible accounts. Based on experience, 2% of Farley's gross accounts receivable have been uncollectible. During 2018, Farley wrote off $650,000 of accounts receivable. Barley's gross accounts receivable as December 31, 2018 is $18,000,000.
In its December 31, 2018, balance sheet, what amount should Farley report as allowance for uncollectible accounts?
a) 880,000
b) 360,000
c)490,000
d) 230,000
2) As of January 1, 2018, Barley Co. had a credit balance of $520,000 in its allowance for uncollectible accounts. Based on experience, 2% of Farley's gross accounts receivable have been uncollectible. During 2018, Farley wrote off $650,000 of accounts receivable. Barley's gross accounts receivable as December 31, 2018 is $18,000,000.
How much bad debts expence should Barley record for 2018?
a) 880,000
b) 360,000
c)490,000
d) 230,000
Explanation / Answer
1 Allowance for uncollectible accounts=18000000*2% = $360000 2 Bad debts expense=(650000-520000)+360000= $490000
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