Question

Quality Book Sales began Year 2 with $78,500 Accounts Receivable and $4,710 Allowance for Doubtful Accounts.

During the year, Quality experienced the following transactions:

1. Sales on Account $550,000
2. Collection on Accounts Receivable $556,000
3. After several collection attempts, wrote off $2,850 of accounts that could not be collected.
4. Estimated 4% of receivables are uncollectible.

What is the balance in Accounts Receivable immediately after the write-off in #3 above?

What is the balance in the Allowance for Doubtful Accounts immediately after the write-off in #3?

What is the Uncollectible Accounts Expense for Year 2?

Answer 1

· Workings

		Account receivables	Allowance for Doubtful accounts
	Year 2 Beginning balance	$78,500	$4,740
#1	Sales on account	$550,000
#2	Collection on account receivables	($556,000)
#3	Accounts written off	($2,850)	($2,850)
	Unadjusted balances	$69,650	$1,890
#4	Bad Debt Expense [($69650 x 4%) - 1890]		$896
	Adjusted balances	$69,650	$2,786

· Requirements

[1] Balance in Account receivables after #3 = $ 69,650 debit

[2] Balance in Allowance for Doubtful accounts after write off = $ 1890 credit
[3] Uncollectible account expense for year 2 = $ 896