The following information pertains to Jacobsen Co.'s accounts receivable at December 31,2016:
During 2016,Jacobsen wrote off $18,000 in receivables and recovered $6,000 that had been written off in prior years.Jacobsen's December 31,2015,allowance for uncollectible accounts was $40,000.Under the aging method,what amount of allowance for uncollectible accounts should Jacobsen report at December 31,2016?

Question

The following information pertains to Jacobsen Co.'s accounts receivable at December 31,2016: 
During 2016,Jacobsen wrote off $18,000 in receivables and recovered $6,000 that had been written off in prior years.Jacobsen's December 31,2015,allowance for uncollectible accounts was $40,000.Under the aging method,what amount of allowance for uncollectible accounts should Jacobsen report at December 31,2016?

Quizplus · Accepted Answer

To find the correct allowance for uncollectible accounts, we need to consider the following:

1. Start with the allowance for uncollectible accounts as of December 31, 2015, which was $40,000.
2. Add the amount of bad debt expense recorded during the year. We know that $18,000 in receivables were written off during the year, so this represents the bad debt expense for the year (since the write-off reduces the accounts receivable balance and increases the allowance balance). Therefore, we add $18,000 to the allowance balance.
3. Subtract any recoveries of previously written-off receivables. We know that $6,000 of previously written-off receivables were recovered during the year, so we need to subtract this amount from the allowance balance.
4. Determine the new allowance for uncollectible accounts after these adjustments.

Using this method, we can calculate the new allowance for uncollectible accounts as follows:

$40,000 (beginning balance) + $18,000 (bad debt expense) - $6,000 (recoveries) = $52,000

Therefore, the correct choice is D) $49,400.

The Following Information Pertains to Jacobsen Co