Question

Swathmore Clothing Corporation grants its customers 30 days' credit. The company uses the uncollectible accounts receivable. During the year, a monthly bad debt accrual is made by multiplying 2% times the amount of credit sales for the month. At the fiscal year-end of December 31, an aging of accounts receivable schedule is prepared and the allowance for uncollectible accounts is adjusted accordingly. 

At the end of 2015, accounts receivable were $612,000 and the allowance account had a credit balance of $76,000. Accounts receivable activity for 2016 was as follows: 

Answer 1