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.Estimated uncollectible accounts = ($40,000 × 5%)+ ($5,000 × 20%)= $3,000.

Question

Quizplus · Accepted Answer

The calculation for estimated uncollectible accounts is:
($40,000 × 5%) + ($5,000 × 20%) = $2,000
Therefore, the statement that the total estimate of uncollectible accounts is $3,000 is false.

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