Question

As of January 1, 2021, Barley Co. had a credit balance of $523,000 in its allowance for uncollectible accounts. Based on experience, 2% of Barley's gross accounts receivable have been uncollectible. During 2021, Barley wrote off $653,000 of accounts receivable. Barley's gross accounts receivable as December 31, 2021 is $18,150,000.

In its December 31, 2021, balance sheet, what amount should Barley report as allowance for uncollectible accounts?

Answer 1

Allowance for doubtful accounts, beginning = $523,000

Accounts receivable written off = $653,000

Accounts receivable, ending = $18,150,000

Percentage uncollectible = 2% of accounts receivable

Allowance for doubtful accounts, ending = Accounts receivable, ending x Percentage uncollectible

= 18,150,000 x 2%

= $363,000

In its December 31, 2021, balance sheet, $363,000 should Barley report as allowance for uncollectible accounts.

Please give a positive rating if you are satisfied with this solution and if you have any query kindly ask.

Thanks!!!