A company expects 5% of its newer accounts receivable to be uncollectible and 20% of its older accounts to be uncollectible.If the company has $40,000 of newer accounts and $5,000 of older accounts,the total estimate of uncollectible accounts is $2,000.

Question

Quizplus · Accepted Answer

The calculation for estimated uncollectible accounts is incorrect. It should be:

($40,000 x 5%) + ($5,000 x 20%) = $2,000.

A Company Expects 5% of Its Newer Accounts Receivable to Be