Valdez Company uses the percent of receivables method to estimate uncollectible accounts expense. Valdez began 2013 with balances in Accounts Receivable and Allowance for Doubtful Accounts of $38,250 and $2,900, respectively. During the year, the company wrote off $2,320 in uncollectible accounts. In preparation for the company's 2013 estimate, Valdez prepared the following aging schedule: What will Valdez record as Uncollectible Accounts Expense for 2013?
A)$3,646
B)$746
C)$3,066
D)$2,320

Question

Valdez Company uses the percent of receivables method to estimate uncollectible accounts expense. Valdez began 2013 with balances in Accounts Receivable and Allowance for Doubtful Accounts of $38,250 and $2,900, respectively. During the year, the company wrote off $2,320 in uncollectible accounts. In preparation for the company's 2013 estimate, Valdez prepared the following aging schedule:  What will Valdez record as Uncollectible Accounts Expense for 2013?
A)$3,646 
B)$746 
C)$3,066 
D)$2,320

Quizplus · Accepted Answer

($54,000 x 1%) + ($22,500 x 5%) + ($4,960 x 10%) + ($2,220 x 25%) + ($1,900 x 50%) = $3,646 estimated ending allowance balance; $2,900 beginning allowance balance + uncollectible accounts expense - $2,320 write-offs = $3,646 ending allowance balance; uncollectible accounts expense = $3,646 - $2,900 + $2,320 = $3,066

Valdez Company Uses the Percent of Receivables Method to Estimate