On January 1, Year 2, Grande Company had a $71,800 balance in the Accounts Receivable account and a $3,100 balance in the Allowance for Doubtful Accounts account. During Year 2, Grande provided $194,000 of service on account. The company collected $234,500 cash from accounts receivable. Uncollectible accounts are estimated to be 1% of sales on account. The amount of uncollectible accounts expense recognized on the Year 2 income statement is:

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Business

Lexi Lang

2 May, 09:52

On January 1, Year 2, Grande Company had a $71,800 balance in the Accounts Receivable account and a $3,100 balance in the Allowance for Doubtful Accounts account. During Year 2, Grande provided $194,000 of service on account. The company collected $234,500 cash from accounts receivable. Uncollectible accounts are estimated to be 1% of sales on account. The amount of uncollectible accounts expense recognized on the Year 2 income statement is:

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Maddison · Answer 1

It iwll be none uncollectible account expense for Year 2

Because it is overstated

Explanation:

3,100 beginning allowance

Allowance 1% of credit sales

194,000 * 0.01 = 1,940

current balance (3,100)

adjustment decrease of 1,160

The allowance will be adjusted to Prior period Adjustment