On January 1, 2014 the Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $30,000 and $500, respectively. During the year the company reported $75,000 of credit sales. There were $550 of receivables written-off as uncollectible in 2014. Cash collections of receivables amounted to $74,550. The company estimates that it will be unable to collect one percent (1%) of credit sales.
The amount of uncollectible accounts expense recognized in the 2014 income statement will be
A) $700.
B) $300.
C) $750.
D) $550.

Question

Quizplus · Accepted Answer

The uncollectible accounts expense is estimated as 1% of credit sales, which is 1% of $75,000, equaling $750.