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Arundel Company uses percentage of sales to estimate uncollectibles
Arundel Company uses percentage of sales to estimate uncollectibles. At the end of the fiscal year, December 31, 2018, Accounts Receivable has a balance of $78,000 and had a total of $700,000 in credit sales. Arundel assumes that 2.0% of sales will eventually be uncollectible. before adjustment, the Allowance for Uncollectible Accounts had a credit balance of 6,000. What dollar amount should be credited to Allowance for Uncollectible Accounts at year end?
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Answer
Expert Solution
Computation of Dollar Amount should be credited to Allowance for Uncollectible Accounts at year end:
The estimated uncollectible amount is 2% of sales.
2% of $700,000
$14,000
Dollar Amount should be credited to Allowance for Uncollectible Accounts at year end = $14,000 - $6,000 = $8,000
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