As of January 1, 2013, Farley Co. had a credit balance of $520,000 in its allowance for uncollectible accounts. Based on experience, 2% of Farley's credit sales have been uncollectible. During 2013, Farley wrote off $650,000 of accounts receivable. Credit sales for 2013 were $18,000,000. In its December 31, 2013, balance sheet, what amount should Farley report as allowance for uncollectible accounts?

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The allowance for uncollectible accounts should be $230,000. This is calculated by taking the beginning balance of $520,000, adding the amount of bad debts written off during the year ($650,000), and then subtracting the amount of the provision for bad debts ($360,000). The provision for bad debts is calculated by multiplying the credit sales for the year ($18,000,000) by the uncollectible percentage (2%).