Ace Computing Company
On January 1, Year 1, the accounts receivable and the allowance for doubtful accounts carried balances of $40,000 and $1,500 respectively. During the year, the company reported $80,000 of credit sales. There were receivables of $500 written off as uncollected in Year 1. Cash collections of receivables amounted to $78,200. The company estimates that it will be unable to collect 4% of the year-end accounts receivable balance.
-Refer to the figure Ace Computing Company.What amount of bad debts expense will be recognized in the Year 1 income statement?

Question

Quizplus · Accepted Answer

$40,000 (Year-end accounts receivable balance beg.bal.)+ $80,000 (Net credit sales)-(Accts.written off)F1F1F1S1-F1F1F10 $78,200 (Collections)= $41,300
Year-end allowance balance = $1,000
$41,300 F1F1F1S1*F1F1F10 .04 or 4% = $1,652
$1,652 F1F1F1S1-F1F1F10 $1,000 = $652

Ace Computing Company on January 1, Year 1, the Accounts Receivable and the Receivable