On January 1, Year 2, Kincaid Company's Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $69,000 and $2,500, respectively. During the year Kincaid reported $180,000 of credit sales. Kincaid wrote off $1,600 of receivables as uncollectible in Year 2. Cash collections of receivables amounted to $210,100. Kincaid estimates that it will be unable to collect one percent (1%) of credit sales. The amount of uncollectible accounts expense recognized in the Year 2 income statement will be:

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Business

Quinten Serrano

11 October, 19:51

On January 1, Year 2, Kincaid Company's Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $69,000 and $2,500, respectively. During the year Kincaid reported $180,000 of credit sales. Kincaid wrote off $1,600 of receivables as uncollectible in Year 2. Cash collections of receivables amounted to $210,100. Kincaid estimates that it will be unable to collect one percent (1%) of credit sales. The amount of uncollectible accounts expense recognized in the Year 2 income statement will be:

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Salvador · Answer 1

bad debt expense 18,000

Explanation:

bad debt 1% of credit sales:

180,000 x 1% = 18,000

When the adjustment is made base on sales, the current balance in the allowance for doubtful debts is irrelevant.

So no calculation is needed for those.