Scott's Plumbing Company uses the allowance method and uses the percent of credit sales method of estimating uncollectible accounts expense. Based on past history and industry averages, ¾% of credit sales are expected to be uncollectible. The Company recorded $3,500,000 of credit sales and $1,000,000 in cash sales during the year. At December 31, the balance of accounts receivable was $250,000 and the allowance for doubtful accounts had a credit balance of $3,500.
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Home » Business » Scott's Plumbing Company uses the allowance method and uses the percent of credit sales method of estimating uncollectible accounts expense. Based on past history and industry averages, ¾% of credit sales are expected to be uncollectible.