As of January 1, 2018, Barley Co. had a credit balance of $520,000 in its allowance for uncollectible accounts. Based on experience, 2% of Farley's gross accounts receivable have been uncollectible. During 2018, Farley wrote off $650,000 of accounts receivable. Barley's gross accounts receivable as December 31, 2018 is $18,000,000.
-In its December 31, 2018, balance sheet, what amount should Farley report as allowance for uncollectible accounts?

Question

As of January 1, 2018, Barley Co. had a credit balance of $520,000 in its allowance for uncollectible accounts. Based on experience, 2% of Farley's gross accounts receivable have been uncollectible. During 2018, Farley wrote off $650,000 of accounts receivable. Barley's gross accounts receivable as December 31, 2018 is $18,000,000. 
-In its December 31, 2018, balance sheet, what amount should Farley report as allowance for uncollectible accounts?

Quizplus · Accepted Answer

$18,000,000 × 2% = $360,000.