Question

20. As of January 1, 2021, Farley Co. had a credit balance of $525,000 in its allowance for uncollectible accounts. Based on experience, 2% of Farley's credit sales have been uncollectible. During 2021, Farley wrote off $646,000 of accounts receivable. Credit sales for 2021 were $18,400,000. In its December 31, 2021, balance sheet, what amount should Farley report as allowance for uncollectible accounts?

21. As of January 1, 2021, Barley Co. had a credit balance of $536,000 in its allowance for uncollectible accounts. Based on experience, 1% of Barley's gross accounts receivable have been uncollectible. During 2021, Barley wrote off $666,000 of accounts receivable. Barley's gross accounts receivable as December 31, 2021 is $18,800,000. In its December 31, 2021, balance sheet, what amount should Barley report as allowance for uncollectible accounts?

22. On June 1, Parson Assoc. sold equipment to Arleo and agreed to accept a 3-month, $70,000, 15% interest-bearing note in payment at a time when the prevailing rate of interest for similar transactions was 15%. When the note was collected upon maturity, Parson would recognize interest revenue of:

Answer 1

Question No-1 (20 per screen above):-

2021 sales = $18,400,000

Uncollectible accounts estimate = $18,400,000 * 2% = $368,000

=Credit balance at the beginning of the year - Write offs during the year

=$525,000 - $646,000

=($121,000)

The balance of Allowance for uncollectible accounts at the end of the year is:-

=$368,000 - $121,000

Allowance for uncollectible accounts at the end of the year = $247,000

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