On January 1, Year 2 Grande Company had a $16,000 balance in the Accounts Receivable account and a zero balance in the Allowance for Doubtful Accounts account. During Year 2, Grande provided $104,000 of service on account. The company collected $97,000 cash from accounts receivable. Uncollectible accounts are estimated to be 2% of sales on account.What is the amount of uncollectible accounts expense recognized on the Year 2 income statement?

Question

Quizplus · Accepted Answer

The estimate of uncollectible accounts is 2% of $104,000, or $2,080. This amount is recognized as an expense on the income statement, and the Allowance for Doubtful Accounts is increased by the same amount, resulting in a year-end balance of $2,080. The amount of cash collected during the year is not relevant to the calculation of the uncollectible accounts expense.

On January 1, Year 2 Grande Company Had a $16,000