On January 1, 2014 the Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $30,000 and $500, respectively. During the year the company reported $75,000 of credit sales. There were $550 of receivables written-off as uncollectible in 2014. Cash collections of receivables amounted to $74,550. The company estimates that it will be unable to collect one percent (1%) of credit sales. The amount of uncollectible accounts expense recognized in the 2014 income statement will be? $700 $300. $750. $550.

Question

Business

Guest

2 September, 13:12

On January 1, 2014 the Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $30,000 and $500, respectively. During the year the company reported $75,000 of credit sales. There were $550 of receivables written-off as uncollectible in 2014. Cash collections of receivables amounted to $74,550. The company estimates that it will be unable to collect one percent (1%) of credit sales. The amount of uncollectible accounts expense recognized in the 2014 income statement will be? $700 $300. $750. $550.

+1

Answers (1)

Know the Answer?

Willie Mathews · Answer 1

correct option is $750

Explanation:

solution

we know here that Net balance of opening accounts receivable is

Net balance of opening accounts receivable = $30000 - $500

Net balance of opening accounts receivable = $29500

and

Credit sales during the year is here $7500 0

and Cash payments received = 74550

so

uncollecectible account expenses = credit sales * % of sale uncollectible

so uncollecectible account expenses = $75000 * 1%

uncollecectible account expenses = $750

so correct option is $750