Question

Hunt Company estimates uncollectible accounts using the percentage of

receivables method and expects that 5 per cent of outstanding receivables will

be uncollectible for 2010.

The balance in Accounts Receivable is $200,000, and the allowance account has a

$3,000 credit balance before adjustment at year end.

Which of the following is the value of uncollectible accounts expense for 2010?

Choose one.

$13,000

$9,850

$10,000

$7,000

Answer 1

Answer

7000   

Balance in Accounts Receivable	200000
Estimated percentage of uncollectible accounts	5%
Expected uncollectible accounts for 2015 (200000*5%)	10000
(-) Credit balance of allowance account	-3000
The uncollectible accounts expense for 2015	7000