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The following information relates to a company's accounts receivable: accounts receivable balance at the beginning of the year $300,000


The following information relates to a company's accounts receivable: accounts receivable balance at the beginning of the year $300,000, allowance for uncollectible accounts at the beginning of the year, $25,000 (credit balance); credit sales during the year, $1,500,000; accounts receivable written off during the year, $16,000, cash collections from customers, $1450,000 Assuming the company estimates that future bad debts will equal 10% 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

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Answer #1

(1) Year-end balance in the allowance for uncollectible accounts :-

Beginning account receivable

$300000

Credit sale

$1500000

Account receivable written off

($16000)

Cash collected

($1450000)

Ending account receivable

$334000

Year-end balance in the allowance for uncollectible accounts ($334000 * 10%)

$33400

(2) Bad Debt Expense :-

Account receivable written off

$16000

Year-end balance in the allowance for uncollectible accounts

$33400

Beginning balance in the allowance for uncollectible accounts

($25000)

Bad Debt Expense

$24400
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