On January 1, Year 2, Kincaid Company's Accounts Receivable and the Allowance for Doubtful Accounts carried balances of $31,000 and $500, respectively. During Year 2, Kincaid reported $72,500 of credit sales, wrote off $550 of receivables as uncollectible, and collected cash from receivables amounting to $74,550. Kincaid estimates that it will be unable to collect one percent (1%)of credit sales. What is the amount of uncollectible accounts expense that will be reported on the Year 2 income statement?

Question

Quizplus · Accepted Answer

The uncollectible accounts expense is estimated as 1% of credit sales, which is 1% of $72,500, resulting in $725.