Emerz Corporation had sales of $850,000,of which 20% were cash sales.As of year-end,the balance in the Allowance for Uncollectible Accounts before adjusting for bad debts was a $400 debit.The company estimates bad debts as 10% of ending accounts receivable or 1.5% of credit sales.The ending balance in Accounts Receivable is $72,000.What is the balance in the Allowance for Uncollectible Accounts if Emerz Corporation estimates bad debts using a percentage of ending accounts receivable?

Question

Quizplus · Accepted Answer

The balance in the Allowance for Uncollectible Accounts is calculated as 10% of the ending accounts receivable, which is $72,000. Therefore, the allowance should be $7,200 (10% of $72,000).

Emerz Corporation Had Sales of $850,000,of Which 20% Were Cash