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Valuing Accounts Receivable – Allowance Method for Uncollectible Accounts HEB Inc. bases estimated uncollectible accounts on...

Valuing Accounts Receivable – Allowance Method for Uncollectible Accounts

HEB Inc. bases estimated uncollectible accounts on total credit sales for the period. HEB Inc. estimates that 2% of its $600,000 sales on credit will not be collected. The credit balance in the allowance for uncollectible account before adjustment is $6,000. What is the appropriate ending balance in the allowance for uncollectible account?

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Answer #1

Uncollectible account expense = 600000*2% = 12000

Ending balance in allowance for uncollectible account = Beginning balance+Uncollectible account expense

                                                                                       = 6000+12000

Ending balance in allowance for uncollectible account = 18000

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