The amount of uncollectible accounts expense recognized in the 2012 income statement will be
A) $700.
B) $300.
C) $750.
D) $550.

Question

Quizplus · Accepted Answer

The uncollectible accounts expense for the year is calculated as a percentage of credit sales. In 2012, credit sales were $20,000 and the company expects 4% of credit sales to be uncollectible. Therefore, the uncollectible accounts expense for 2012 is $20,000 x 4% = $800. However, the company had previously estimated that $50 of the accounts receivable from 2011 were uncollectible, and this was written off in 2012. Therefore, the net uncollectible accounts expense recognized in the 2012 income statement is $800 - $50 = $750.

The Amount of Uncollectible Accounts Expense Recognized in the 2012