Jumpin Corporation uses the percent-of-sales method to estimate uncollectibles. Net credit sales for the current year amount to $2,020,000, and management estimates 3% will be uncollectible. The Allowance for Uncollectible Accounts prior to adjustment has a debit balance of $1600. The amount of Uncollectible-Account Expense reported on the income statement will be:

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The amount of Uncollectible-Account Expense reported on the income statement will be $60,600. This is calculated as follows:Beginning balance in Allowance for Uncollectible Accounts: $1,600Add: Estimated uncollectible accounts (3% of $2,020,000): $60,600Ending balance in Allowance for Uncollectible Accounts: $62,200The Uncollectible-Account Expense is the increase in the Allowance for Uncollectible Accounts, which is $60,600.

Jumpin Corporation Uses the Percent-Of-Sales Method to Estimate Uncollectibles