Using the aging- of- accounts- receivable method to estimate uncollectibles, Avidity Corporation estimates that $3,550 of its accounts receivable will be uncollectible. Prior to adjustment, the Allowance for Uncollectible Accounts has a credit balance of $800. Uncollectible account expense to be reported on the income statement is:

Question

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The uncollectible account expense is calculated by adjusting the allowance to the estimated uncollectible amount. Since the allowance already has a credit balance of $800, the expense reported will be $3,550 - $800 = $2,750.

Using the Aging- Of- Accounts- Receivable Method to Estimate Uncollectibles