The Miller Company earned $123,000 of revenue on account during Year 1. There was no beginning balance in the accounts receivable and allowance accounts. During Year 1, Miller collected $82,000 of cash from its receivables accounts. The company estimates that it will be unable to collect 3% of its sales on account.What is the amount of uncollectible accounts expense that will be recognized on the Year 1 income statement?

Question

Quizplus · Accepted Answer

The amount of sales on account during Year 1 was $123,000. Miller collected $82,000, leaving a balance of $41,000. The estimate for uncollectible accounts is 3% of sales on account, or $3,690 ($123,000 x 0.03). Therefore, the amount of uncollectible accounts expense that will be recognized on the Year 1 income statement is $3,690.

The Miller Company Earned $123,000 of Revenue on Account During