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28 December, 23:27

As of January 1, 2021, Barley Co. had a credit balance of $521,000 in its allowance for uncollectible accounts. Based on experience, 1% of Barley's gross accounts receivable have been uncollectible. During 2021, Barley wrote off $651,000 of accounts receivable. Barley's gross accounts receivable as December 31, 2021 is $18,050,000.

In its December 31, 2021, balance sheet, what amount should Farley report as allowance for uncollectible accounts?

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  1. 29 December, 01:20
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    The amount which is should be reported as an allowance for uncollectible accounts is $180,500

    Explanation:

    The amount for allowance for uncollectible accounts on December 31, 2021 is computed as:

    Allowance for uncollectible = Gross Accounts Receivable * Percentage of uncollectible

    where

    gross accounts receivable amounts to $18,050,000

    Percentage of uncollectible is 1%

    Putting the values:

    = $18,050,000 * 1%

    = $180,500
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