At December 31, Year 1, Gasp Co.'s allowance for uncollectible accounts had a credit balance of $30,000. During Year 2, Gasp wrote off uncollectible accounts of $45,000. At December 31, Year 2, an aging of the accounts receivable indicated that $50,000 of the December 31, Year 2, receivables may be uncollectible. What amount of allowance for uncollectible accounts should Gasp report in its December 31, Year 2, balance sheet?

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Business

Tanya Ramsey

3 August, 15:41

At December 31, Year 1, Gasp Co.'s allowance for uncollectible accounts had a credit balance of $30,000. During Year 2, Gasp wrote off uncollectible accounts of $45,000. At December 31, Year 2, an aging of the accounts receivable indicated that $50,000 of the December 31, Year 2, receivables may be uncollectible. What amount of allowance for uncollectible accounts should Gasp report in its December 31, Year 2, balance sheet?

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Alannah · Answer 1

The amount of $50,000 will be reported as an allowance for uncollectible accounts for the Year 2 on December 31 in the balance sheet.

Explanation:

Under the approach of the balance sheet, the ending balance of the allowance for the uncollectibe accounts is the percentage (%) of the ending balance of the accounts receivable.

The amount of uncollectible accounts should reflect the aggregate nedded ending balance of the allowance which amounts to $50,000.

Therefore, the $50,000 is the amount to be uncollectible.