Using the aging-of-receivables 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

Quizplus · Accepted Answer

The uncollectible account expense to be reported on the income statement is the difference between the estimated uncollectibles ($3,550) and the current balance in the allowance for uncollectible accounts ($800). This is because the current balance in the allowance account is the previously estimated uncollectibles that have not yet been written off. Therefore, the uncollectible account expense is:

$3,550 - $800 = $2,750

Therefore, the correct answer is C.

Using the Aging-Of-Receivables Method to Estimate Uncollectibles, Avidity Corporation Estimates